The GIAJ Chairman's Statement (Translation)
- Building on the experience of the past 100 years, we will continue to provide safety and security to society -
(June 15, 2017

Toshifumi Kitazawa, ChairmanToshifumi Kitazawa, Chairman

 I would like to report on the progress made on our major initiatives during my one-year tenure and offer my views.

1. Introduction

 Including the series of earthquakes that occurred in Kumamoto last April, earthquakes and typhoons have been occurring in areas previously thought to be low risk. This reminded us yet again of the threat of natural disasters across the country. In line with the government's urgent prioritization of making society more resilient to natural disasters, we actively engaged in discussions to find ways to address the situation.

 Owing to such developments, our Association has focused on initiatives to encourage people to prepare for natural disasters through dissemination of information about natural disaster risks, raising people's awareness of disaster prevention and reduction, as well as promoting earthquake insurance.

 We will continue to contribute to building a safe and secure society in collaboration with the government and local municipalities, etc.

2. Overview of our 2016 fiscal year initiatives

 Our Seventh Mid-Term Business Plan, which spans three years, focuses on the following three pillars: 'Responding to new environmental changes', 'Preventing and reducing disasters and crimes', and 'Nurturing the environment for consumers' usage of insurance'.

 The 2016 fiscal year is the second year of the Mid-Term Business Plan, and we have positively implemented the three pillars through initiatives that focus on two viewpoints, which are the 'Wide dissemination of risk-related information' and 'Activities which contribute to increasing the soundness of general insurers and ensuring proper insurance payments'.

(1) Wide dissemination of risk-related information

i. Promoting understanding of earthquake risks and residential earthquake insurance (hereafter ' earthquake insurance')

 Our Association actively provides information regarding Japan's earthquake risks, and stresses the necessity of earthquake insurance as an effective self-help tool.

 As earthquake risks have become increasingly evident in our country since the Kumamoto earthquake last April and the one that hit the central part of Tottori prefecture last October, we have intensified our support of agents who play important roles in promoting earthquake insurance.

 Starting with the forum on September 5th to commemorate the 50th anniversary of the earthquake insurance scheme, we completed a series of seminars in 30 cities across the country for around 3,600 agents to deepen their understanding of earthquake risks in their local areas. We also supported agents' activities to promote earthquake insurance by providing new video tools for customers, etc. Moreover, we undertook other measures to widely disseminate information on earthquake insurance to consumers such as launching a special website to commemorate the 50th anniversary of the earthquake insurance scheme, PR activities through media outlets, and 'earthquake experience' learning opportunities. As a result, the number of Earthquake Insurance policies has been steadily increasing. The total currently stands at about 17.71 million policies*.

 In January this year, more detailed damage classifications and a review of rates and premiums were implemented following revisions to the earthquake insurance scheme. In regions where rates and premiums for earthquake insurance increased significantly to respond to those areas' high level earthquake risks, we will advocate the necessity of earthquake insurance in a more tenacious manner.

 * Data released by the General Insurance Rating Organization of Japan (as of end of March 2017)

    - Year on year rate of 104.6% (increased by 770,000 policies)

    - Increased by around 5 million policies over the 6 years since the Great East Japan Earthquake in March 2011

ii. Prevention and reduction measures for natural disasters, etc.

 Our Association designated 6 priority regions in which to carry out disaster prevention and reduction awareness raising activities. Focusing on the specific risk characteristics of each region, we completed a series of disaster prevention educational events for consumers, community leaders and fire corps volunteers. As public support has limitations, in the event of a mega disaster, self-help and mutual-help among local residents are vital for the protection of lives and disaster reduction. By providing educational opportunities for disaster prevention, we disseminated the necessity of preparation during ordinary times and the importance of mutual-help within the local community.

 We have been promoting the 'Exploration for Disaster Prevention' program for elementary school pupils since 2004. Last year, while 19,158 pupils participated in the program, 2,781 entries were submitted to the annual 'safety map-making campaign'. To date, the total number of participants has reached 150,000.

 Our program is the largest one of its kind in the country. For practical educational safety programs such as ours to be adopted in schools, we actively reached out to the Ministry of Education, Culture, Sports, Science and Technology to have curriculum guidelines revised.

 Presented by the Association for Resilience Japan, our accumulated activities for disaster prevention and reduction received three awards for excellence at the 3rd Japan Resilience Awards in 2017.

iii. Activities contributing to the prevention of traffic accidents involving the elderly

 The ratio of traffic accidents involving the elderly who are either victims or perpetrators has been growing yearly. We have promoted activities regarding the prevention of traffic accidents involving the elderly in collaboration with the police and local municipalities, and through these activities we have made efforts towards the mitigation of social losses.

 Last year, during road safety lessons and door-to-door visits, we provided information on preventive measures for driving and/or pedestrian accidents. We also compiled a report on the characteristics and factors behind accidents involving the elderly in collaboration with the Institute for Traffic Accident Research and Data Analysis. We will utilize the results of the report for future accident prevention activities.

 This year we launched the 'General Insurance Security and Safety Advisor System' in which retired insurance professionals are assigned to promote road safety activities in local community. We hope to further contribute to the prevention of traffic accidents involving the elderly by strengthening such community based activities.

iv. Activities to foster understanding of general insurance

 Our Association disseminates various kinds of information to assist the general public in gaining a better understanding of general insurance.

 We developed a 'Literacy Map on general insurance and disaster prevention', which categorizes the appropriate study curriculum that each age group should undertake to enhance their knowledge of general insurance and disaster prevention. Based on this map, we expanded tools for educational use and awareness raising, such as new supplementary teaching materials for elementary schools, junior high schools, and high schools, etc.

 For high school and university pupils as well as general consumers, we dispatched lecturers to a record 708 seminars that encouraged attendees to accurately grasp the risks surrounding their daily lives and to deepen their understanding of the role of general insurance.

 We will continue to advance such activities to foster understanding of general insurance.

(2) Activities that contribute to increasing the soundness of general insurers and ensuring proper insurance payments

i. The development of earthquake insurance claims payment readiness

 Our Association is enhancing the readiness of its general insurance companies to make prompt and proper payments of earthquake insurance claims in the event of a large-scale disaster such as a Nankai Trough Earthquake or a Tokyo Inland Earthquake, both of which are expected to cause damage several times greater than that of the Great East Japan Earthquake.

 Following the Kumamoto Earthquake and an earthquake that hit central Tottori Prefecture, mobile devices were introduced in certain damage investigation cases in order to accelerate claims payment. In order to expand their use, we are currently offering user training and considering improvements in the functions of such devices. In addition, we expanded the scope of damage investigations based on customers' self-reporting (through written forms, and without on-site investigations), which is an extraordinary measure implemented only in the event of a large-scale earthquake.

 In line with these efforts, we are in the process of a review of the industry-wide Business Continuity Plan (BCP) to help our member companies swiftly prepare for prompt claims payment and maintaining key functions during disasters. In order to make it more effective, we have worked on identifying outlying issues.

ii. Response to international insurance supervision and regulations

 Our Association has actively followed the development of international supervision and regulations as well as regulations in each country and region. We made requests and proposals at international conferences and consultations.

 We submitted our opinions in consultations on the development of the Common Framework for the Supervision of Internationally Active Insurance Groups (IAIGs), namely ComFrame, which is proceeding due to the efforts of the International Association of Insurance Supervisors (IAIS). As well as the second consultation on the Risk-based Global Insurance Capital Standard (ICS), other consultations which we responded to include the consultation on the revision of Insurance Core Principles (ICP) and ComFrame.

 In the future, international supervision and regulations will be implemented by authorities in each jurisdiction including Japan. In this regard, as a matter of priority, we will continue to actively express our opinions on issues as and when they arise.

iii. Activities regarding cyber security

 As the threat of cyber attacks has heightened on a global scale, our Association has engaged in support to enforce cyber security within the industry, through activities such as collecting updated information in collaboration with relevant authorities, and encouraging general insurance companies to participate in drills, etc. In addition, we have advanced measures to enable mutual cooperation among insurers by developing an arrangement whereby general insurers immediately share information on security incidents.

 General insurance companies are 'Critical Infrastructure Providers', which are defined by the government in the following terms: 'If their functions are suspended, deteriorate or become unavailable, the results could have a significant impact on people's lives and economic activities'.

 We will proceed with measures to strengthen cyber security.

(3) Other issues

i. Activities to establish a new insurance solicitation system

 The Insurance Business Act Amendment came into effect in May last year. It stipulates basic rules for solicitation processes and agents' duty to develop operations, etc. with increased requirements for explanations and proposals from a consumer perspective. We have supported insurers and agents in responding to these new solicitation rules through measures including the revision of related guidelines.

 Furthermore, to help general insurance solicitors acquire further knowledge and business skills, since 2012 we have been operating an accreditation program called the 'General Insurance College Course', together with the Independent Insurance Agents of Japan, Inc.

 This year, a record 1,759 people took the 'Consulting Course' to obtain the accreditation of 'General Insurance Total Planner', the most prestigious qualification of our general insurance college course (the number increased by 301 year on year). This being the case, we understand that high expectations are placed on solicitors to provide advice on complicated and diversified risks, so they need a high degree of expertise in consulting abilities. In order to meet consumers’ expectations, we will continue to increase the number of such highly qualified and reliable solicitors by promoting the general insurance college course.

ii. Enhancement of consumer consultations, complaints, and dispute settlement

 Our 'General Insurance ADR Centers', which are located in 10 cities across the country, deal with general consumer consultations and provide support in solving disputes between customers and insurers from a neutral and fair standpoint.

 Last year, we reinforced our arrangement to promote face-to-face interviews with consumers by increasing the number of dispute settlement advisors. We also undertook measures to enhance the ability of staff through educational training programs, etc.

iii. Prevention of insurance fraud and fraudulent claims, etc.

 In order to detect suspicious claims at an early stage, we have various information sharing systems in place among insurance companies. In April 2015, we launched a system to identify suspicious claims by enabling insurers to efficiently refer to records of past insurance claims related to insurance types that cover bodily injury, such as automobile insurance.

 Last year we considered expanding the scope of the system to all lines of insurance in order to ensure more effective prevention of insurance fraud and fraudulent claims. We will continue to work on the enhancement of an industry-wide database of such claims, etc., to ensure proper claims payment.

iv. Infrastructure support for Asian regions and countries

 We have promoted our efforts to contribute to improving the level of sophistication of the financial infrastructure of Asian countries, mainly through insurance technical collaboration, together with The Financial Services Agency (J-FSA), The General Insurance Rating Organization of Japan (GIROJ), and The General Insurance Institute of Japan (GIIJ).

 In May this year, we held the 'Asia General Insurance Executive Forum' in Tokyo. We invited top executives from supervisory and regulatory bodies, and insurance associations in Thailand, Indonesia, Cambodia, Malaysia and the Philippines. Through active discussions on 'Trust' and 'ERM', participants deepened their common understanding of the direction and challenges in Asian general insurance markets.

 In addition, we hosted the ISJ's (Insurance School (Non-Life) of Japan) general and advanced courses in Tokyo, overseas seminars in Myanmar with a view to offering technical assistance and promoting exchange among the general insurance industries of East Asia. We also offered knowledge and know-how regarding the industry's response to major earthquakes and disaster prevention and reduction on occasions such as the East Asian Insurance Congress and the ASEAN Insurance Council.

 We will continue with our efforts to contribute to the development of sound general insurance markets in Asia by building closer cooperation with each country and region.

3. Conclusion

 Japan's general insurance industry has achieved two important milestones: The 50th anniversary of the Earthquake insurance scheme in June last year, and our Association's 100th anniversary in May this year. We would like to express our greatest respect for the past efforts of those involved in overcoming the challenges that surrounded them to make general insurance a part of the social and economic infrastructure of the country.

 Unprecedented changes may continue to occur within the economy and society such as more severe and frequent natural disasters, the remarkable evolution of technology, and changes in demographics. Based on insurers' appropriate management of complicated and diversified risks while offering products and services that meet social expectations under sound management, as well as enforcing customer-oriented business operations such as making accurate proposals regarding risks surrounding our customers and reliable payment of insurance claims in times of distress, we are positive of our industry's further development.

 We are determined to strive hard so that the general insurance industry continues to support people’s lives and be a vital part of society over the next 100 years as well.

 In closing, I would like to express my sincere gratitude for your warm support and cooperation during my one-year tenure.