Tentative translation

November 25, 2005
Financial Services Agency
The Government of Japan

Administrative Actions on 26 Non-Life Insurance Companies

1. According to the reports based on Article No.128 and 200 of the Insurance Business Law, the following problems were confirmed among 26 non-life insurance companies (hereinafter referred to as the ''Insurers'') regarding the non-payment of fringe claims.
   
   Note: ''The non-payment of fringe claims'' means that an Insurer has not paid the subparts of a claim, while the said Insurer has paid the core claim and should have also paid fringe claims for extra expenses such as consolation payment, condolence payment, expenses for loaners, etc., because the policyholders did not apply for the payment of the claims.

(1)	Regarding the fringe claims, the number of non-payments amounted to 180,000, and Insurers furthered the disadvantages of policyholders. Moreover, the Insurers did not pay fringe claims based on their business plan and their master terms and conditions of policies under Article No.4 (2) - 2 and - 3 of the Insurance Business Law.
(2)	The top management did not sufficiently recognize the necessity of the establishment of their systems responding to the characteristics regarding the payment of fringe claims and did not play leading roles for the establishment. The top management also did not sufficiently recognize the importance of the proper payment of claims. Even if they found non-payment regarding some kinds of claims, they did not check the status of the non-payment regarding other kinds of claims. Thus, they did not take measures toward the improvement of the claim payment control systems.
(3)	The proper establishment of operations and procedures regarding claim processing, including computer system support, and the accurate understanding of knowledge of the insurers' products are insufficient, and, therefore, the systems that conduct business operations properly are not sufficiently established. The department and/or division in charge of operation did not sufficiently recognize the properness of the payment of fringe claims and did not establish systems that check whether the fringe claims, separate from the core part of claims, are properly paid.
(4)	The Insurers have developed products that will pay fringe claims with different characteristics from typical non-life insurance regarding liability for damage; however, the coordination system for the prevention of the non-payment of fringe claims among related divisions has not been sufficiently established through the development of such products.

2. The non-payment resulted from flaws in the system from the development of the products with fringe claims to the management of the claim payment; that is, it can be concluded that the causes of the non-payments are structural problems such as flaws of the governance system and internal control system, in addition to causes regarding the processing of individual cases.
   Therefore, we issued the following administrative actions (Business Improvement Order), based on Article No.132 (1) and No. 204 (1) of the Insurance Business Law.

(1)	Improvement and enhancement of the governance system Improve the system so that the top management will be involved in the establishment of accurate business operations so as not to repeat the non-payment of fringe claims. Establish a system, regarding the fringe claims, in which the monitoring and internal audits will be properly conducted, so that the results will be reported to the top management, and the top management will take actions to promptly correct the entire business operation if any problem is confirmed.
(2)	Examination and improvement of the system regarding the explanation to customers Regarding the brochures, and any explanatory documents for customers, examine whether the brochures, etc., explain to customers clearly what fringe claims are, and promptly rectify any problematic brochures. Regarding documents to inform customers, such as statements of claims, examine whether the documents can guide customers as to what kinds of fringe claims are included when the customers charge claims, and promptly improve any problematic document.
(3)	Examination and improvement of the product development system Before the release or revisions of products, establish a coordination system among product development divisions, claim divisions, computer system divisions and other relevant divisions so as not to repeat the non-payment of claims, including the arrangement of concrete items to examine the matters on (2) and (4) described above and below, for example.
(4)	Examination and improvement of the claim payment management system Examine claim operational system and improve necessary matters Examine procedures and documents regarding claim processing, such as computer systems, forms, regulations, and manuals, and improve necessary matters Strictly enforce education and training of claim staff Establish a system to respond promptly to inquiries from policyholders regarding the non-payment of past claims, and a system to examine past claims as an insurance company so as not to overlook the non-payment of past claims.
(5)	Regarding (1) to (4) described above, a business improvement plan that describes concrete measures and the timing of the implementation must be submitted by January 13, 2006.
(6)	The progress and implementation of the business improvement plan and the status of the improvement must be reported every six months until the implementation of the plan is completed.

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(An attached sheet)

(Non-life Insurance Companies Name)

• Tokio Marine & Nichido Fire Insurance Co., Ltd.
• Mitsui Sumitomo Insurance Co., Ltd.
• Sompo Japan Insurance Inc.
• NIPPONKOA Insurance Co., Ltd.
• Aioi Insurance Co., Ltd.
• Nissay Dowa General Insurance Co., Ltd.
• The Fuji Fire & Marine Insurance Co., Ltd.
• The Kyoei Fire & Marine Insurance Co., Ltd.
• The Nisshin Fire & Marine Insurance Co., Ltd.
• The Asahi Fire & Marine Insurance Co., Ltd.
• SECOM General Insurance Co., Ltd.
• Meiji Yasuda General Insurance Co., Ltd.
• The Sumi-Sei General Insurance Co., Ltd.
• The Daido Fire & Marine Insurance Co., Ltd.
• Sony Assurance Inc.
• SAISON Automobile & Fire Insurance Co., Ltd.
• Mitsui Direct General Insurance Co., Ltd.
• Sonpo 24 Insurance Co., Ltd.
• ACE Insurance
• AXA Non-Life Insurance Co., Ltd.
• Jl Accident & Fire Insurance Co., Ltd.
• American Home Assurance Company
• AIU Insurance Company
• Zurich Insurance Company
• Assicurazioni Generali S.p.A
• The New India Assurance Company, Ltd.