Mitsui Sumitomo Insurance Co., Ltd. (“the Company”) (President and CEO Toshiaki Egashira) has framed a schedule for reviewing the system of appropriate fire insurance solicitation pursuant to the request by the Financial Services Agency (“FSA”) of Japan, dated December 20, 2006, and today reported the schedule to the FSA as set forth below.
| 1. |
Outline of the request from the FSA
The Company is requested to review, with respect to fire insurance, 1) whether the Company’s systems for instructing its agents and providing explanation to customers are properly maintained in light of the appropriate non-life insurance solicitation system as prescribed by the Supervision Guideline II-3-3-5 and the conclusion and solicitation of non-life insurance contracts as prescribed by the Supervision Guideline II-3-3-6, , and 2) whether insurance premiums are properly calculated and applied under the systems. The Company is also requested to report the scope, method and projected completion date of the review. |
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| 2. |
Outline of today’s report |
| 2.1. |
Scheme of the review
The Company will retrieve and examine all policies for which premiums may be improperly applied out of all existing policies by the end of March 2007. The Company will confirm proper application of premiums with respect to all new and renewed policies starting April 2007.
Simultaneously, taking the following measures, the systems for instructing agents and providing explanation to customers will be examined and enhanced. |
| 2.1.1. |
Review of existing policies (by the end of March 2007)
The Company will retrieve all policies for which premiums may be improperly applied (for incorrect recognition of structural grade of insured buildings and/or failure to apply possible discount), or under which the insured amount may exceed the actual value (over-insurance),analyzing existing policies, and check each policy with the customers.
Please note that a review and correction of incorrect recognition of structural grade with respect to wood framed buildings with autoclaved lightweight concrete (“ALC”) exterior, has been conducted since last year and will be completed shortly. |
| 2.1.2. |
Checking at the point of signing (starting April 2007)
“Fire Insurance Check Sheets” will come into use starting April 2007, containing explanation and customer questionnaire necessary at the point of signing. Agents will avoid applying improper premiums (for structure misrecognition or discount failure) or permitting over-insurance by assuring that necessary explanation and confirmation are completed. The Company will continue on this approach throughout the fiscal year ending March 2008. (See 2.2 below) |
| 2.2. |
Checking by the Fire Insurance Coverage Check Sheet
The check sheet describes methods for classifying building structures, standards and methods for appraising buildings and contents, and a list of possible discounts. The Company will work to assure that policies are underwritten properly and that existing policies are examined and corrected by explanation and confirmation on these items at the time of signing.
To enforce this approach effectively, the Company will conduct educational sessions for all agents when introducing the check sheet and assign necessary staff to sales departments and branches who check the sheets received and direct agents to correct improper sheets. In addition, head office divisions will monitor and analyze the performance, take further measures of supervision and examination, and thus fully enforce this approach. |
| 2.3. |
Other related actions
The Company has also been taking the following actions under its business improvement plan, recognizing the necessity of basic education for agents and checking at the point of singing in regard to fire insurance products. |
| 2.3.1. |
Agent education
- Semi-annual, education-focused “Compliance Enhancement Months” campaigns
Within the ongoing round during January and February 2007, the Company holds training sessions of fire insurance in respect of structural grade determination, application of discounts, over-insurance(valuation of insured buildings).
- Implanting the “basic cycle of insurance” among the agents
The Company defined a series of customer cares from solicitation and explanation of an insurance product to signing a contract to policy maintenance as the “basic cycle of insurance for an agent,” and launched a practical training campaign based on this concept started for all agents October 2006.
- Launching “Base Program” sessions for new agents and salespersons
The Company launched a training program for new agents and salespersons October 2006 to provide basic practical skills for product explanation and paper work pertaining to writing a policy using actual marketing tools.
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| 2.3.2. |
Review of policies covering wood framed buildings with ALC exterior
The Company has conducted review of structural grade determinations with regard to wood framed buildings with ALC (or concrete plate or block) exterior, and has been correcting incorrect determinations. The review and correction will soon be completed. |
| 2.3.3. |
Introduction of handbooks on product explanation with insurance brochures
The Company has introduced and is utilizing “Product Explanation Flow Based on Pamphlet – handbook on Fire Insurance product explanation.” |
| 2.3.4. |
Double-check on brochures by the Corporate Quality Control Department
The Corporate Quality Control Department, established in order to check the appropriateness of business last September, is reviewing brochures and other marketing materials prepared by the product divisions of the head office, and giving improvement direction if necessary. |
Please note that the Company will take similar approach on automobile, personal accident and other lines of insurance products, such as introduction of check sheets.
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