Press Conference by SUZUKI Shunichi, Minister of Finance and Minister of State for Financial Services

(Excerpt)

(Tuesday, January 30, 2024, 10:11 am to 10:21 am)

Q.

A business improvement order has been issued against Sompo Japan and Sompo Holdings in connection with a case of fraudulent insurance claims involving BIGMOTOR. I would like to ask your opinion on what kind of ideal situation is best for insurance companies and insurance holding companies.
At the same time, the business improvement order on the 25th stated that the reason for the administrative action was that pressure had confused management decisions. At a press conference on the following day, the 26th, Sompo Holdings' CEO Sakurada said that good pressure is necessary. He thought it would be good if Mr. Shirakawa could speak frankly about what he thinks, and gave the microphone to Mr. Shirakawa, the president of Sompo Japan. Mr. Shirakawa denied one of the major reasons for the inappropriate management decision, saying that he was not under such pressure. I would like to ask your opinion on whether the administrative action by the Financial Services Agency was appropriate. 

A.

The first question is about what is essentially the most desirable way in which insurance firms and their holding companies operate. Generally speaking, the insurance business run by insurance firms fulfills the function of contributing to the stability of national life and the sound development of the national economy by providing a certain degree of economic compensation to cover heavy damage and loss caused by accidents, disasters, diseases, etc. Therefore, the insurance business has a public nature.
We believe that in order to perform this function fully, it is necessary to protect insurance policyholders properly mainly by complying with laws and regulations and appropriately managing insurance agencies responsible for the selling of insurance and other operations.
We also believe that from this point of view, insurance holding companies need to properly manage their business, including by striving to ensure that their subsidiaries, or insurance firms, operate their business soundly and appropriately.
With respect to the second question, as pointed out in the business improvement order, the Financial Services Agency (FSA) believes that one of the direct reasons Sompo Japan hastily decided to refer cars to BIGMOTOR’s repair shops again was that the parent Sompo Holdings put pressure on Sompo Japan to maintain profitability, and the FSA also believes that the reason Sompo Japan decided to do so under such pressure without giving full consideration to the decision was that the insurance firm had a corporate culture that placed greater emphasis on its sales performance and profitability rather than the benefits of customers and that discouraged employees from forwarding unfavorable information appropriately and at the right time to its management and its parent’s personnel who were responsible for business management.
Before we issued an administrative action, we confirmed with Sompo Japan that there were no discrepancies in the recognition of these facts between the FSA and the insurance firm. Such is the explanation I received from the administrative staff.
And the true meaning of what President Shirakawa said at the press conference is unclear. But believing that it is necessary to urge Sompo Japan to consider and implement measures to prevent the recurrence of similar incidents, including the redressing of its wrong corporate culture, we issued a business improvement order in order to ensure that Sompo Japan did not cause again incidents similar to the inappropriate insurance claims it had recently made. The administrative action is appropriate in content, and as I said earlier, before issuing an administrative action, we are confirming with the insurance firm as to whether there are any problems with the administrative action.

Q.

I would like to ask an additional question about the Sompo Japan. During the press conference, CEO Sakurada stated that as CEO, he will take the initiative in formulating business improvement plans. In terms of corporate culture, do you think it is appropriate for Mr. Sakurada, who has greatly influenced the Group for the past 10 years, to take the initiative in formulating business improvement plans, including those for the future? 

A.

In creating the business improvement plan, the FSA will not ask for the kind of people to be involved or excluded. I think it will be the company's responsibility to create a plan based on the business improvement order.