LIFE INSURANCE BUSINESS IN JAPAN...1. Summary of the Life Insurance Market in Fiscal 2014 LIAJ...

LIFE INSURANCE BUSINESS IN JAPAN

The Life Insurance Association of Japan

2014-2015

Contents

1. Summary of the Life Insurance Market in Fiscal 2014 ....................................................................... 2

a ) Insurance Business Results ............................................................................................................... 2 b ) Revenues and Expenditures .............................................................................................................. 7 c ) Assets ................................................................................................................................................... 9 d ) Liabilities and Net Assets ................................................................................................................... 10 e ) Member Companies and Sales Force............................................................................................. 10

2. Topics in the Life Insurance Industry ................................................................................................. 11

a) Revisions to the Insurance Business Act ......................................................................................... 11 b) Japan's Corporate Governance Code ............................................................................................. 13 c) Principles for Responsible Institutional Investors (Japan's Stewardship Code) ........................... 14 d) Follow-up Activities on Postal Privatization ...................................................................................... 15 e) Efforts to combat Tax Evasion .......................................................................................................... 16 f ) The Social Security and Tax Number System ................................................................................ 16

3. Our Activities ........................................................................................................................................... 17

a) Empowering the Next Generation .................................................................................................... 17 b) Efforts to Ensure Sound Operation .................................................................................................. 19 c) Contribution to Society ...................................................................................................................... 26 d) LINC (The Life Insurance Network Center) ..................................................................................... 28

4. The Life Insurance Association of Japan .......................................................................................... 29

Organization Chart ................................................................................................................................ 30 Board Members ..................................................................................................................................... 31 Member Companies ............................................................................................................................. 32

Appendix ............................................................................................................................................................ 34

I. Voluntary Guideline List ..................................................................................................................... 35 II. Japan Institute of Life Insurance ....................................................................................................... 37 III. Life Insurance Policyholders Protection Corporation of Japan ...................................................... 38

1. Summary of the Life Insurance Market in Fiscal 2014

LIAJ Business in Japan 2014/2015 2

a) Insurance Business Results

1) Individual Insurance

The number of new policies for individual insurance (including converted contracts) was 19.39 million (102.1% y/y), and the amount of new policies1 (reflecting the net increase arising from the conversion) was 67,431 billion yen (100.9% y/y) for fiscal 2014.

By type of new policies for individual insurance (excluding converted contracts), medical life insurance ranked top in number (25.3% of the total), followed by whole life insurance (23.1%), term insurance (14.9%), cancer insurance (11.8%) and endowment insurance (9.0%).

Of the total amount of new policies for individual insurance (excluding converted contracts), term insurance ranked top (31,099 billion yen, 44.5% of the total), followed by whole life insurance (15,208 billion yen, 21.8%), endowment insurance (4,653 billion yen, 6.7%), whole life insurance with interest-sensitive reserve fund (2,972 billion yen, 4.3%) and juvenile insurance (2,273 billion yen, 3.3%).

The number of policies in force for individual insurance was 151.73 million (105.5% y/y), and the amount of policies in force was 857,432 billion yen (100.0% y/y).

As for the number of policies in force for individual insurance, medical life insurance ranked top (21.1% of the total), followed by whole life insurance (20.8%), cancer insurance (14.5%), term insurance (12.2%), endowment insurance (8.5%) and whole life insurance with term rider (7.2%).

Of the total amount of policies in force for individual insurance, term insurance ranked top (237,329 billion yen, 27.7% of the total), followed by whole life insurance (157,989 billion yen, 18.4%), whole life insurance with term rider (154,620 billion yen, 18.0%), whole life insurance with interest-sensitive reserve fund (91,787 billion yen, 10.7%) and endowment insurance (42,160 billion yen, 4.9%).

Table 1 New Policies and Policies in Force for Individual Insurance

(Number: million, Amount: billion yen, Y/Y: %)

Fiscal

Year

New Policies Policies in Force

Number Amount Number Amount

Y/Y Y/Y Y/Y Y/Y

2010 15.86 102.2 62,992 106.2 121.91 104.2 879,596 97.4

2011 16.22 102.3 65,601 104.1 127.20 104.3 865,346 98.4

2012 19.67 121.3 71,345 108.8 136.01 106.9 861,651 99.6

2013 18.99 96.5 66,836 93.7 143.88 105.8 857,540 99.5

2014 19.39 102.1 67,431 100.9 151.73 105.5 857,432 100.0*The number includes converted contracts, and the amount reflects the net increase arising from the conversion.

1 The amount of major protections such as death protection.


LIAJ Business in Japan 2014/2015

3

Figure 1: Percentage Distribution of Individual Insurance by Type (Number of New Policies)

23.1

1.0

2.1

14.9

1.1 9.0

25.3

11.8

6.8 4.9 Whole Life Insurance

Whole Life with Term Rider

Whole Life with Interest-sensitive Reserve FundTerm Insurance

Variable Insurance

Endowment Insurance

Medical Life Insurance

Cancer Insurance

Juvenile Insurance

Others

*Excluding converted contracts

Figure 2: Percentage Distribution of Individual Insurance by Type (Number of Policies in Force)

20.8

7.2

4.7

12.2

1.1 8.5

21.1

14.5

4.4 5.7

Whole Life Insurance

Whole Life with Term Rider

Whole Life with Interest-sensitive Reserve FundTerm Insurance

Variable Insurance

Endowment Insurance

Medical Life Insurance

Cancer Insurance

Juvenile Insurance

Others




2) Individual Annuity Insurance

The number of new policies for individual annuity insurance (including converted contracts) was 1.59 million (106.0% y/y), and the amount of new policies (reflecting the net increase arising from the conversion) was 8,632 billion yen (107.9% y/y).

Of all the number of new policies for individual annuity insurance (excluding converted contracts), that of fixed individual annuity insurance accounted for 83.2% of the total and that of variable individual annuity insurance accounted for 16.8% of the total in fiscal 2014.

Of the total amount of new policies for individual annuity insurance (excluding converted contracts), that of fixed individual annuity insurance was 7,001 billion yen (80.9% of the total) and that of variable individual annuity insurance was 1,653 billion yen (19.1%).

The number and amount of policies in force for individual annuity insurance for this fiscal year were 20.50 million (100.1% y/y) and 104,131 billion yen (100.3% y/y).

As for the number of policies in force for individual annuity insurance, that of fixed individual annuity insurance accounted for 87.1% and that of variable individual annuity insurance for 12.9% of the total.

Of the total amount of policies in force for individual annuity insurance, that of fixed individual annuity insurance was 88,052 billion yen (84.6% of the total) and that of variable individual annuity insurance was 16,078 billion yen (15.4%).

Table 2 New Policies and Policies in Force for Individual Annuity Insurance

(Number: million, Amount: billion yen, Y/Y: %)

Fiscal

Year

New Policies Policies in Force

Number Amount Number Amount

Y/Y Y/Y Y/Y Y/Y

2010 1.44 88.5 6,894 83.8 18.98 103.5 95,710 101.6

2011 1.58 110.0 7,899 114.6 19.75 104.0 98,915 103.3

2012 1.65 103.9 8,563 108.4 20.42 103.4 103,518 104.7

2013 1.50 91.4 8,003 93.5 20,47 100.2 103,788 100.3

2014 1.59 106.0 8,632 107.9 20.50 100.1 104,131 100.3

*The number includes converted contracts, and the amount reflects the net increase arising from the conversion.



5

Figure 3: Percentage Distribution of Individual Annuity Insurance by Type (Number of New Policies)

83.2

16.8

Fixed Annuity

Variable Annuity


Figure 4: Percentage Distribution of Individual Annuity Insurance by Type (Number of Policies in Force)

87.1

12.9

Fixed Annuity

Variable Annuity




3) Medical Insurance

Individual insurance products that provide medical coverage includes insurance policies with medical riders as well as medical insurance, which provide hospitalization and surgery protection as a base policy.

The number of policies in force of medical life insurance which provides protection against hospitalization and surgery as a base policy was 31.94 million (106.6% y/y), and that of cancer insurance was 21.97 million (103.8%).

With respect to insurance policies with hospitalization and surgery coverage (the sum of riders and medical insurance base policies among individual life insurance and individual annuity insurance), the number of policies with accidental hospitalization riders in force was 73.57 million (101.7% y/y), those with sickness hospitalization riders in force was 73.71 million (102.1% y/y), and those with surgical benefit riders in force was 96.73 million (102.3% y/y).

Table 3 Numbers of Policies in Force for Medical Insurance, Cancer Insurance and Insurance Contracts with

Hospitalization and Surgery Coverage (Number: million Y/Y: %)

Fiscal

Year

Number of Base Policies in Force Number of Policies in Force for Contracts with

Hospitalization and Surgery Coverage

Medical

Insurance

Cancer

Insurance

Accidental

Hospitalization

Sickness

Hospitalization Surgery

2010 23.83 19.29 67.80 66.98 88.51

2011 25.53 19.84 69.39 68.76 90.52

2012 27.78 20.54 70.81 70.41 92.05

2013 29.98 21.16 72.31 72.21 94.52

2014 31.94 21.97 73.57 73.71 96.73

Y/Y (%) 106.6 103.8 101.7 102.1 102.3



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b) Revenues and Expenditures

1) Premium Income

The total amount of premium income was 37,222 billion yen (107.2% y/y).

Among the premium income, individual insurance was 24,546 billion yen (108.0% y/y), individual annuity insurance was 5,154 billion yen (119.5% y/y), group insurance was 1,119 billion yen (100.6% y/y), and group annuity insurance was 4,175 billion yen (108.4% y/y).

Table 4 Breakdown of Premium Income (billion yen)

Fiscal

Year

Total Premium

Income

Individual

Insurance

Individual

Annuities

Group

Insurance

Group

Annuities Others

2010 34,454 20,447 4,802 1,115 3,812 4,275

2011 36,289 22,734 4,679 1,114 3,925 3,835

2012 37,140 24,099 4,374 1,109 3,683 3,874

2013 34,738 22,721 4,312 1,112 3,851 2,739

2014 37,222 24,546 5,154 1,119 4,175 2,226

Y/Y (%) 107.2 108.0 119.5 100.6 108.4 81.3

2) Investment Results

Due to the steady increase in the interests and dividends (7,085 billion yen, 103.0% y/y) and increase in others (3,082 billion yen) including the profits on asset management of special accounts (2,699 billion yen), the total investment income amounted to 12,310 billion yen (108.7% y/y).

The investment yield on assets in general accounts was 2.58%. The breakdown of items of assets is as follows: domestic stocks (5.31%), foreign securities (5.50%), loans (2.28%), real estate (2.50%), and bonds (1.88%).

Table 5 Investment Income (billion yen)

Fiscal

Year

Interest and Dividends Profit on

Sales of

Securities

Foreign

Exchange

Profit

Others Total Securities Loans

Real

Estate Others

2010 6,265 4,764 1,065 342 93 1,113 1 298 7,679

2011 6,293 4,892 986 326 88 1,011 81 752 8,139

2012 6,475 5,153 919 318 84 935 1,184 3,238 11,835

2013 6,877 5,620 866 312 79 1,124 693 2,631 11,326

2014 7,085 5,880 809 312 83 1,032 1,110 3,082 12,310

Y/Y (%) 103.0 104.6 93.5 100.1 104.7 91.8 160.1 117.1 108.7

Table 6 Portfolio Yield Classified by Type of Asset (%)

Fiscal

Year

General Account Assets

Bonds Domestic

Stocks

Foreign

Securities Loans Real Estate

2010 1.79 1.86 1.25 2.06 1.98 2.52

2011 1.92 1.91 1.56 2.91 1.94 2.27

2012 2.36 2.00 0.61 5.25 2.18 2.35

2013 2.40 1.95 5.14 4.60 2.15 2.43

2014 2.58 1.88 5.31 5.50 2.28 2.50



3) Insurance Benefits Paid

The total amount paid by all life insurance companies under life insurance contracts in fiscal 2014 was 34,952 billion yen (103.5% y/y). Among the amount of insurance benefits paid, claims paid amounted to 12,971 billion yen (90.7% y/y), annuities paid amounted to 5,196 billion yen (115.5% y/y), benefits (other than claims paid and annuities paid) amounted to 4,066 billion yen (100.3% y/y) and surrender benefits paid amounted to 8,772 billion yen (109.7% y/y).

Table 7 Breakdown of Insurance Benefits Paid (billion yen)

Fiscal Year Insurance

Benefits Paid*

Claims Paid Annuities

Paid Benefits

Surrender

Benefits

2010 32,049 17,243 2,876 3,975 5,798

2011 31,208 16,143 3,134 3,804 5,680

2012 31,685 15,296 3,360 3,936 5,867

2013 33,778 14,307 4,499 4,053 7,999

2014 34,952 12,971 5,196 4,066 8,772

Y/Y (%) 103.5 90.7 115.5 100.3 109.7*Including others

4) Basic Profit and Ordinary Profit

The total amount of basic profit, which represents the profitability of the life insurance companies for the year, was 3,823 billion yen (107.9% y/y) in fiscal 2014. The total amount of ordinary profit was 3,510 billion yen (113.2% y/y).

Table 8 Basic Profit and Ordinary Profit (billion yen)

Fiscal Year Basic Profit* Ordinary Profit

2010 2,628 1,841

2011 3,074 2,583

2012 3,259 2,564

2013 3,545 3,101

2014 3,823 3,510

Y/Y (%) 107.9 113.2

*Basic Profit = Ordinary Profit - Capital Gain/Loss - Nonrecurring Income/Loss



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c) Assets

As of the end of fiscal 2014, total assets stood at 367,255 billion yen (104.8% y/y). Among the items, securities accounted for 81.5% of the total assets (299,429 billion yen, 105.1% y/y) followed by loans at 10.0% of the total (36,810 billion yen, 96.6% y/y).

Among securities, Japanese government bonds ranked top with 148,761 billion yen (99.3% y/y) accounting for 49.7% of the total securities, followed by foreign securities at 73,280 billion yen (119.3% y/y), which is the record high, corporate bonds at 24,855 billion yen (99.8% y/y), stocks at 22,697 billion yen (125.9% y/y) and local government bonds at 13,868 billion yen (99.0% y/y). Bonds (total of government bonds, local government bonds and corporate bonds) (187,485 billion yen, 99.3% y/y) decreased for the first time in 11 years.

Among the assets, the amount of bonds accounted for 51.1%, foreign securities for 20.0%, and stocks for 6.2% of the total in fiscal 2014.

Table 9 Breakdown of Assets (Amount: billion yen, Ratio: %)

Fiscal Year

Cash/Deposits Call Loans Monetary Trusts Securities Ratio Ratio Ratio Ratio

2010 5,655 1.8 2,009 0.6 2,071 0.6 247,980 77.3

2011 3,515 1.1 2,509 0.8 2,014 0.6 257,560 78.8

2012 3,574 1.0 2,766 0.8 2,059 0.6 278,244 80.7

2013 4,416 1.3 2,669 0.8 2,459 0.7 285,031 81.3

2014 5,608 1.5 3,672 1.0 3,332 0.9 299,429 81.5

Y/Y (%) 127.0 137.6 135.5 105.1

(Continued)

Fiscal Year

Loans Tangible Fixed Assets

Others Total Assets

Ratio Ratio Ratio

2010 43,877 13.7 6,772 2.1 12,323 3.8 320,691

2011 42,173 12.9 6,601 2.0 12,578 3.8 326,952

2012 40,244 11.7 6,460 1.9 11,646 3.4 344,998

2013 38,099 10.9 6,319 1.8 11,586 3.3 350,582

2014 36,810 10.0 6,329 1.7 12,072 3.3 367,255

Y/Y (%) 96.6 100.2 104.2 104.8

Table 10 Breakdown of Securities (Amount: billion yen, Ratio: %)

Fiscal Year

Government Bonds Local Government Bonds

Corporate Bonds Stocks

Ratio Ratio Ratio Ratio

2010 132,398 53.4 11,916 4.8 25,283 10.2 16,214 6.5

2011 141,275 54.9 13,163 5.1 25,342 9.8 14,744 5.7

2012 148,769 53.5 13,934 5.0 25,155 9.0 16,725 6.0

2013 149,815 52.6 14,008 4.9 24,895 8.7 18,029 6.3

2014 148,761 49.7 13,868 4.6 24,855 8.3 22,697 7.6

Y/Y (%) 99.3 99.0 99.8 125.9

(Continued)

Fiscal Year

Foreign Securities

Other Securities Bonds* Stocks

Ratio Ratio Ratio Ratio

2010 45,738 18.4 40,866 16.4 4,871 2.0 16,428 6.6

2011 46,926 18.2 42,023 16.3 4,902 1.9 16,107 6.3

2012 55,986 20.1 50,780 18.2 5,205 1.9 17,673 6.4

2013 61,450 21.6 56,186 19.7 5,264 1.9 16,830 5.9

2014 73,280 24.5 67,137 22.4 6,142 2.1 15,965 5.3

Y/Y (%) 119.3 119.5 116.7 94.9

*Including national government bonds, local government bonds, corporate bonds and other foreign securities



d) Liabilities and Net Assets

Total liabilities stood at 341,128 billion yen (102.6% y/y) as of the end of fiscal 2014, accounting for 92.9% of the total of liabilities and net assets. Meanwhile, total net assets were 26,127 billion yen (143.9% y/y), accounting for 7.1% of the total of liabilities and net assets.

Table 11 Liabilities and Net Assets (billion yen)

Fiscal Year

Liabilities*

Net Assets Insurance Reserves

Price Fluctuation

Reserves

2010 311,007 295,379 1,500 9,683

2011 315,469 299,683 1,679 11,482

2012 328,673 308,433 2,127 16,324

2013 332,431 312,207 2,700 18,151

2014 341,128 318,031 3,081 26,127

Y/Y (%) 102.6 101.9 114.1 143.9

*Including others

e) Member Companies and Sales Force

The number of LIAJ member companies, which are all life insurers operating in Japan, stood at 41 as of the end of December 2015 including 5 mutual insurers.

The number of member companies with foreign participation stood at 16 as of the end of December 2015, composed of 13 domestic companies with foreign capital and 3 branch offices of foreign companies.

The number of tied sales agents decreased for the fifth successive year to 227 thousand (99.5% y/y).Besides, while the number of corporate type sales agencies has been flat, the number of individual type sales agencies started to increase in fiscal 2014 for the first time in 17 years. Meanwhile, the number of sales representatives at agencies had been increasing since the banks are allowed to sell all types of life insurance products in fiscal 2002. However, it decreased to 992 thousand (97.7% y/y) in fiscal 2014.

Table 12 Number of Member Companies and Agents/Agencies

Fiscal

Year

Member

Companies*

Number of Sales Force (in thousands)

Tied Agents Agencies Sales Reps at Agencies

2010 46 (5) 240 102 989

2011 43 (5) 236 99 1,005

2012 43 (5) 233 96 1,011

2013 43 (5) 228 91 1,015

2014 42 (5) 227 94 992 *Numbers in parentheses are those of mutual companies. As of the end of the fiscal year.

Reference: Member Companies with Foreign Participation* (As of the end of December 2015)

Domestic Companies with Foreign Capital Branch Offices of Foreign Companies

AEGON Sony Life

AIG Fuji Life

Allianz Life

AXA Life

AXA Direct Life

Crédit Agricole Life

Gibraltar Life

Manulife Life

MassMutual Life

MetLife

NN Life

Prudential Life

PGF Life

Aflac

Cardif Assurance Vie

Zurich Life

*Foreign stake of 50% or more

2. Topics in the Life Insurance Industry


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a) Revisions to the Insurance Business Act

As the business environment surrounding the Japanese insurance market is changing significantly, partial revisions were made to the Insurance Business Act on May 30, 2014. The aim is to restructure the framework of regulations on insurance solicitation in response to the changing environment, and to contribute to the government's economic stimulus plans by fostering enhancement of the financial industry.

Along with the changes in social conditions in Japan, such as the declining birthrate and rapidly aging population, the Japanese citizens' needs for insurance products and services are changing. The method of selling insurance is also changing and becoming diverse, including the participation of large-scale insurance agencies such as insurance shops and insurance sales involving no face-to-face contact such as online shops. Based on the changes noted above, it has become increasingly important for the insurance industry to: offer more extensive range of insurance products and services in accordance with the customers' new demand emerging from the aging population etc. and; implement reinforced regulations related to the insurance solicitation and sales in line with the diversification of sales channels. In this context, discussions on issues including the solicitation and sales of insurance were held at the Financial System Council's Working Group on the Provision of Insurance Products/Services in response to consultation from the State Minister for Financial Services.

The revisions are based on the results of these discussions and report. Below are the details of the revisions.

1) Introduction of obligation to confirm customers' intention and to provide necessary information (to be implemented on May 29, 2016)

The current solicitation regulations do not explicitly provide guiding principles on solicitation. It only lists certain prohibited actions, such as delivery of a false statement or failure of disclosing important matters regarding the insurance contract. In practice, the lack of regulation was supplemented by supervisory requirements (i.e. the Comprehensive Guidelines for Supervision of Insurance Companies). Insurance companies were able to solicit insurance more proactively, by confirming the customers' preference and providing necessary information in accordance with supervisory requirements, by asking customers to sign "declaration of intent" and providing customers with statements that summarize key policy terms and conditions and important notices. However, as customers' needs diversify, insurance companies need to pay closer attention to each stage of the solicitation process, from understanding customers' needs to concluding the contract. By better understanding each customer's needs, insurance companies and agents will be able to recommend appropriate products, and by explaining insurance products with the necessary customer information, insurance companies will be able to earn better understanding and customer experience.

In order to address these increasing needs, the revised regulation will legitimately define the following obligations concerning solicitation: the obligation to confirm the customers' intention, which requires insurance companies to propose a suitable insurance plan matching each customer's needs; and the obligation to provide information, which requires insurers to provide relevant information (e.g. product information) to customers so that they can decide whether to sign the proposed insurance contract.



2) Introduction of obligation on insurance agents to have management systems in place to ensure appropriate solicitation (to be implemented on May 29, 2016)

Under the current regulations, insurance companies are responsible for management and training of their agents and affiliated agencies, but when the agencies employ agents, such agencies themselves are not required to be responsible for management and training of their agents. As distribution channels diversify, with an increasing number of independent agencies selling products of multiple insurers, it is not efficient to require insurance companies to manage and train all their agencies based on detailed understanding of agencies' business activities. Accordingly, insurance agencies themselves need to have management systems in place to ensure appropriate solicitation, under and in addition to management and guidance by the insurance companies.

The revised regulation will oblige not only insurance companies but also insurance agents/insurance agencies to have management systems in place to ensure appropriate solicitation according to the size and characteristics of their business. Under the revised regulation, insurers are still responsible for management and training of their tied agents, and are required to have management systems in place.

3) Relaxation of restriction on certain subsidiary business of foreign financial institutions (implemented on November 28, 2014)

Under the former regulations, there was a restriction on the types of companies that could be held within an insurance group. Insurance companies were not allowed to have companies other than certain financial institutions provided by the Insurance Business Act such as insurance companies, banks and companies doing insurance business in foreign jurisdictions. This made it difficult for Japanese insurance companies to acquire and subsidize financial institutions doing business in foreign jurisdictions because such institutions often own certain types of financial institutions as their subsidiaries, such as asset management companies, that were not allowed to join the insurance group. As a result, the regulations put Japanese insurance companies at a disadvantageous position in their M&A strategies as they were required to dispose of subsidiaries upon M&As, thus preventing Japanese companies from entering overseas markets.

It has been allowed as an exception since 2012 for insurance companies to hold ineligible subsidiary companies of certain types of acquired foreign financial institutions for a determined period (5 years) in principle. Under the revised regulation, the scope of this exception is expanded to include ineligible subsidiary companies of acquired foreign financial institutions that own companies doing insurance business in foreign jurisdictions as well.

4) Abolition of the approval requirement on insurance brokers to conduct brokerage business for long-term insurance contracts (implemented on August 29, 2014)

As for insurance brokers, who solicit insurance independently of insurance companies for the benefit of their clients, they could not effectively be managed or guided by insurance companies and so they were covered by additional regulations (e.g. obligation of security deposits) which did not apply to insurance agents. Due to these entry barriers and restrictions on its business, the insurance broker scheme had not been used as much as initially intended.

Accordingly, the revision of the Insurance Business Act eased certain regulations on insurance brokers to facilitate entry into the insurance brokerage industry and revitalize the business while protecting customers. Under the revised regulation, the approval requirement on brokerage business for long-term insurance contracts (5 years) was abolished, and the required minimum security deposit was lowered from 40 million yen to 20 million yen. Nevertheless, certain special regulations on insurance brokers remain, such as the obligation of good faith for the benefit of the customer and the obligation to disclose commissions.



13

b) Japan's Corporate Governance Code

In the wake of focused discussions on corporate governance, Tokyo Stock Exchange (TSE) formulated the "Japan's Corporate Governance Code" and incorporated it as an Exhibit into its Securities Listing Regulations, after the discussions at the Council of Experts concerning the Corporate Governance Code, of which the Tokyo Stock Exchange and the Financial Services Agency act as joint secretariat, and the publication of "Corporate Governance Code [Final Proposal]" on March 5, 2015. This Code is only applicable to the companies listed on TSE. The Code and the associated rules entered into force on June 1, 2015.

Unlike laws regulations, the Japan's Corporate Governance Code is not legally binding. The approach it adopts for implementation is "comply or explain" (either comply with the principle or explain why it has not done so). As the General Principles, it includes suggestions on "Securing the Rights and Equal Treatment of Shareholders", "Appropriate Cooperation with Stakeholders other than Shareholders", "Ensuring Appropriate Information Disclosure and Transparency", "Responsibilities of the Board" and "Dialogue with Shareholders".

In response to these principles, listed life insurers are taking initiatives such as development of the fundamental policy concerning corporate governance and the standards regarding independence of outside directors, and publication of the corporate governance report.

It is expected that the Japan's Corporate Governance Code and the Japan's Stewardship Code work together effectively, as 'the two wheels of a cart', to create a virtuous cycle in the future - meaning enhanced corporate value, sustainable corporate growth, and increased return on investment for investors and beneficiaries. (See the next section for details of the Japan's Stewardship Code)



c) Principles for Responsible Institutional Investors (Japan's Stewardship Code)

In order to revitalize the Japanese economy, the Japanese government is taking various necessary economic policy measures against the prolonged yen appreciation and deflation to pursue growth strategies. In this economic context, in June 2013, the Cabinet approved the Japan Revitalization Strategy, which states that "principles for institutional investors to fulfill their fiduciary responsibilities, e.g. by promoting medium to long-term growth of companies through engagements (Japanese version of the Stewardship Code)" should be discussed and drafted by the end of the year. To this end, the FSA established the Council of Experts Concerning the Japanese Version of the Stewardship Code (hereinafter, "the Council") in August 2013.

The Council held discussions several times to draw up the principles, and on February 26, 2014, it published "Principles for Responsible Institutional Investors (Japan's Stewardship Code)" (hereinafter, "the Code").

Under the Code, the FSA is required to publish and periodically update the list of institutional investors who have announced their acceptance of the Code. In the seventh version at the end of December 2015, 22 insurance companies have announced their acceptance, of which 18 are life insurance companies. A summary of the Code is as follows:

Principles for Responsible Institutional Investors (Japan's Stewardship Code)

"Stewardship responsibilities" refers to the responsibilities of institutional investors to enhance the medium to long-term investment return for their clients and beneficiaries by improving and strengthening the corporate value as well as sustainable growth of the investee companies through constructive engagement, or purposeful dialogue, based on in-depth knowledge of the companies and their business environment.

This Code defines principles considered to be helpful for institutional investors who behave as responsible institutional investors to fulfill their stewardship responsibilities with due regard to their clients, beneficiaries and investee companies.

The Principles of the Code:

1. Institutional investors should have a clear policy on how they fulfill their stewardship responsibilities, and publicly disclose it.

2. Institutional investors should have a clear policy on how they manage conflicts of interest in fulfilling their stewardship responsibilities and publicly disclose it.

3. Institutional investors should monitor investee companies so that they can appropriately fulfill their stewardship responsibilities with a view to the sustainable growth of the companies.

4. Institutional investors should seek to share understanding with investee companies and work to solve problems through constructive engagement with investee companies.

5. Institutional investors should have a clear policy on voting and disclosure of voting activity. The policy on voting should not be comprised only of a mechanical checklist; it should be designed to contribute to the sustainable growth of investee companies.

6. Institutional investors in principle should report periodically on how they fulfill their stewardship responsibilities, including their voting responsibilities, to their clients and beneficiaries.

7. To contribute positively to the sustainable growth of investee companies, institutional investors should have, in-depth knowledge of the investee companies and their business environment, as well as enough skills and resources to appropriately engage with the companies, and make proper judgments in fulfilling their stewardship activities.



15

d) Follow-up Activities on Postal Privatization

Since the government announced its plans to privatize the nation's postal service in the cabinet's "Basic Policy" and established the government-owned Japan Post in 2003, after continuous discussions on postal privatization within the government, bills of the Postal Service Privatization Act and related acts were passed in 2005. Following this enactment, Japan Post Holdings Co., Ltd. and Japan Post Insurance were established and announced plans to be listed in December 2014. They were successfully listed on the Tokyo Stock Exchange on November 4, 2015.

Increase in the Cap on the Amount of Insurance Coverage of Japan Post Insurance

In response to the invitation on July 14, 2015 for public comments prior to conducting deliberations, from the perspective that an appropriate balance should be taken between the enhancement of the Japan Post Group’s stock valuations and the sound development of the life insurance market, the Life Insurance Association of Japan (the LIAJ) had submitted its comments on August 3, and expressed its opinion at the hearing conducted by the Postal Privatization Committee on August 27, as follows.

In advancing the Postal Privatization, it is essential that Japan Post Holdings and the other private life insurers recognize, and when appropriate, effectively use each other’s strengths.

We recognize that construction of such friendly relationships would lead to the medium to long-term benefit to consumers and sound development of the life insurance market.

However, considering the virtual government ownership of JP Insurance and the lack of specific plans for its complete privatization, the "level playing field" is not ensured. Therefore, we can never agree to any easing of restrictions on the business, including the increase in the cap on the amount of insurance coverage of JP Insurance.

However, in the "Observation on Future Postal Privatization" (the Observation) published on December 25, 2015 by the Postal Privatization Committee, it was expressed that the cap on the amount of additional coverage, which is allowed after four years from the date of conclusion, will be raised to 10 million yen from current 3 million yen and, as the result, the cap on the amount of total coverage will be raised to 20 million yen. Furthermore, the Observation mentioned "gradual easing of restrictions on the business". The LIAJ found such statements in the Observation extremely regrettable and, on the same day, published the statement strongly requesting that future deliberations be made in a fair, neutral and careful manner, taking into the consideration following points.

In carrying out discussions on "gradual easing of restrictions on the business" that has been mentioned in this Observation, concrete action plans should be specified publicly to eliminate the virtual government ownership of JP Insurance, such as by setting an appropriate time limit for the complete disposal of JP Insurance shares, which needs to precede the "gradual easing."

When the JP Insurance is to increase the cap on the amount of coverage based on the current underwriting practice that does not apply medical examinations, it should re-review the appropriateness of its systems in place, such as criteria for underwriting that takes customers’ characteristics into account.



e) Efforts to combat Tax Evasion

Foreign Account Tax Compliance Act

On March 18, 2010, the Foreign Account Tax Compliance Act (FATCA) was enacted in the U.S. as part of the Hiring Incentives to Restore Employment Act of 2010, with the aim of preventing tax evasion by U.S. taxpayers using offshore financial accounts. Under the Act, foreign financial institutions outside of the U.S. are required to report certain information about financial accounts held by U.S. taxpayers directly to the U.S Internal Revenue Service (IRS).

As of July 1, 2014, in accordance with the "Statement of Mutual Cooperation and Understanding between the U.S. Department of the Treasury and the Authorities of Japan to Improve International Tax Compliance and to Facilitate Implementation of FATCA", Japanese life insurance companies started implementing the due diligence procedures to identify certain financial accounts held by U.S. taxpayers when concluding life insurance policy. And also, they started reporting the account information to the IRS when the customers are identified as U.S. taxpayers.

OECD Common Reporting Standard

Following the increased demands for uniforming information exchanged between each country with the aim of preventing tax evasion in accordance with the Automatic Exchange of Financial Account Information (AEOI), the OECD also released a full version of Common Reporting Standard (CRS) for AEOI prepared by the OECD Committee on Fiscal Affairs on July 21, 2014. As for Japan, the Cabinet approved the implementation of the CRS, beginning January 1, 2018 (i.e. committed to first automatic exchange of information in 2018) on January 14, 2015. In Japan, relevant legislations to support CRS were published on March 31, 2015, which will come into force on January 1, 2017. The legislations will require life insurance companies in Japan to collect and report to the National Tax Agency, non-resident account holder information sorted by residence jurisdiction, after identifying the residence of the account holder by following due diligence procedures.

f) The Social Security and Tax Number System

On May 24, 2013, the Act on the Use of Numbers to Identify a Specific Individual in the Administrative Procedure was enacted, which prescribes the Social Security and Tax Number System. Under this system, mayors issue a single 12-digit Individual Number (as known as "My Number") to each resident in Japan, with the aim of improving administrative efficiency, enhancing public convenience, and realizing a more equal and fair society.

Each person holding a resident record was notified of their own Individual Number from October 2015, which is used sequentially for administrative procedures related to social security, taxation, and disaster response beginning in January 1, 2016.

Life insurance companies will need to apply the procedure such as obtaining Individual Numbers of policyholders and beneficiaries, including the numbers on payment records, and submitting the records to tax offices following the initiation of the system. On the other hand, if the Social Security and Tax Number System is expanded in the future to enable all life insurance companies to utilize the system, each insurance company will be able to access administrative information with the prior consent of their customers, even in daily operation. Each insurance company will be capable of making prompt and concrete claims procedure as well as providing appropriate maintenance service, and therefore, since life insurance sector plays a public role to support the public security, contributing to realize safe, secure and affluent life for the citizens.

3. Our Activities


17

a) Empowering the Next Generation

For fiscal 2014, the LIAJ conducted activities, particularly focusing on active participation by women, health promotion and improvement of the service for the elderly. Also, it engaged in building of a better business environment concerning life insurance and of a better environment to help the life insurers grow along with the global economy.

1) Empowering Women

Recognizing that the power of women is actually indispensable to enhance the vitality of society as a whole and to achieve the sustainable economic growth, the LIAJ has conducted following initiatives to commit as a whole industry to create a social environment where women can participate more actively.

The Project to Support Working Parents with Small Children

In line with the Japanese Government's growth strategy which has promotion of active participation by women as one of its pillars, the LIAJ aims to create an environment where working mothers need not to feel that they are compromising on child rearing. Since fiscal 2014, the LIAJ has subsidized specific projects to increase the capacity as well as projects to improve the quality of day nurseries/clubs for after-school activities for children to contribute to the improvement of the environment for women to well manage to work and raise children at the same time.

Developing the "Principles for Promotion of Active Participation by Women"

Recognizing that the power of women is actually indispensable to enhance the vitality of society as a whole and to achieve the sustainable economic growth, the LIAJ developed the "Principles for Promotion of Active Participation by Women" to share and penetrate action points necessary to create an environment where women can make the most of their abilities with member companies, and to promote member companies to take more voluntary and active measures under the leadership of the management.

Collecting and Sharing the Member Companies' Initiatives to Promote Women's Active Participation

With the aim of supporting the member companies with consideration of introducing voluntary and active measures to empower women and with establishment of an action plan, the LIAJ compiled and shared specific initiatives of member companies such as support on childcare or on career-building.

2) Empowering Health

Recognizing that extending healthy life expectancy is an essential element not only in improving people's QOL (Quality Of Life) but also in maintaining vibrant economy and society through enhancing companies' productivity and profitability and encouraging consumption etc., the LIAJ implemented "Awareness-Raising Project for Health Promotion" described below.

Holding Health Promoting Campaigns

In collaboration with local governments and local media, the LIAJ held health promoting campaigns with themes of exercise and diet in different regions. The LIAJ provided people with opportunities to raise awareness of health and to learn how to manage their own health effectively through holding keynote lectures by celebrities and experts, panel discussions and walking events. As many as 180 thousand people participated in events in 2015 that the LIAJ held or sponsored in 4 cities.

Spreading Knowledge to Prevent Lifestyle-Related Diseases

In joint names with Ministry of Health, Labour and Welfare and Liaison Council for Health Japan 21, the LIAJ issued booklets to promote prevention of lifestyle-related diseases with the aim of spreading knowledge on preventing such diseases and the concept of self-medication. About one million copies of such booklets have been distributed and introduced through the LIAJ's health promoting event and other activities and activities by the Japan Institute of Life Insurance. Also, the LIAJ compiled a booklet to share specific initiatives of the member companies regarding health promotion.

3. Our Activities


Delivering a Smart-Phone Healthcare Related Application Software "Kenzo-kun"

The LIAJ developed and has been providing "Kenzo-kun", the LIAJ's original smart-phone healthcare app that supports health promotion broadly by its various functions, focusing on exercise and diet, for free.

3) Empowering Peace of Mind

While delivering peace of mind to our customers, we need to improve our readiness to assist customers in view of the changing social environment and the diversification of their lifestyles and values. The LIAJ has conducted following initiatives to further improve service for the elderly by the member companies.

Efforts to Help Member Companies Improve Their Services for the Elderly

In response to the sharp increase of the elderly population in Japan, life insurance companies need to improve their customer service for the elderly. The LIAJ is therefore utilizing comments received during the Interactive Dialogue on Life Insurance, and shares information on specific best practices of member companies collected by the Secretariat of Consumers' Opinions.

In fiscal 2014, the LIAJ drew up and published the "Guidelines for Life Insurance Services for the Elderly", which outlines basic approach and considerations in order to serve the elderly in an appropriate and transparent way. The LIAJ will continue promoting the efforts of each member company to further reassure the elderly customers in accessing life insurance services, giving due consideration to the characteristics of the elderly.

4) Empowering Insurance Framework

The establishment of a sustainable social security system entails a well-functioning mechanism combining self-help, mutual help and public help, and particularly an environment that facilitates the self-help and self-reliance. Therefore, in addition to the efforts of life insurance companies to enhance their business and service basis to support such self-help, better infrastructure to help them grow along with the global economy is also required. In this context, the LIAJ has conducted following initiatives.

Efforts to Address Revisions to the Insurance Business Act and Encouraging Establishment of Management Systems for Appropriate Solicitation

As the business environment surrounding the Japanese insurance market is changing significantly, partial revisions were made to the Insurance Business Act as of May 30, 2014 to introduce fundamental rules for insurance solicitation (e.g. obligation to confirm customers' intention and to provide necessary information) and obligation on insurance agencies to have management systems for appropriate solicitation in place (See page 11). The LIAJ encourages the member companies' establishment and operation of management systems for appropriate solicitation by compiling and publishing potential questions and answers on main points of the revision and drawing up "Guidelines for Insurance Agents to Have Management Systems for Appropriate Solicitation in Place" and "Guidelines for Solicitation-related Activities"(See Appendix I on page 36).

Requests on Tax Reform toward Enhanced Private Protection Scheme

The LIAJ requested expansion of the tax deduction scheme in 2015 and 2016 tax reform. Amid the ongoing discussion on the establishment of a sustainable social security system, the LIAJ believes that it is important that public and private schemes fulfill their respective roles to support life security by the people.

Based on this idea, the LIAJ will continue to request expansion of tax deduction and other schemes that encourages self-help efforts toward enhanced private protection scheme.

3. Our Activities


19

Comments on Global Standards for Insurance Supervision and International Financial Reporting Standards

Amid the ongoing globalization of the insurance industry, discussions have been held on developing global standards for insurance supervision at the International Association of Insurance Supervisors and on developing International Financial Reporting Standards for insurance contracts at the International Accounting Standards Board. The LIAJ submits various comments to input to such discussions in order for the standards to appropriately reflect the characteristics of the life insurance business in Japan.

Furthermore, in order to strengthen the voice of the insurance industry, the LIAJ is stepping up cooperation with insurance associations in other jurisdictions by joining the Global Federation of Insurance Associations (GFIA) which was established in October 2012.

About the Global Federation of Insurance Associations (GFIA)

The GFIA is a non-profit association established to represent national and regional insurance associations. Currently, its 40 member associations represent insurers and reinsurers in 60 countries that account for around 87% of total insurance premiums worldwide.

Conclusion of Memorandum of Understanding (MoU) with Overseas Life Insurance Associations

The LIAJ has concluded MoU with Indonesia Life Insurance Association in February 2015 and with Korea Life Insurance Association in July 2015, with the aim of promoting the cooperative relationship and mutual understanding between both associations and to exchange views and information on matters and activities of common interest.

b) Efforts to Ensure Sound Operation

1) Initiatives to Ensure Appropriate Business Operation

Development of Voluntary Guidelines

To enable life insurers to provide appropriate handling and best services for policyholders, from arranging the contract to the payment of benefits, the LIAJ has prepared voluntary guidelines which include practical transactions and points to consider. These guidelines are referred to by each member company and their executives and regular employees, and are periodically reviewed by the LIAJ. In fiscal 2014, the LIAJ revised particular guidelines (Guidelines for System related to Reviewing Materials for Soliciting Life Insurance Products, Guidelines for Policy Overview, Guidelines for Important Notices, Guidelines for Pre-contract Documentation and Guidelines for Obtaining Faithful Disclosure from Customers) in accordance with the findings from the compiled measures for promoting the simplicity and clarity of solicitation materials, in order to make solicitation materials simpler and easier to understand.

Collection and Sharing of Best Practices

The LIAJ conducts the "Value-Up Survey" to monitor the measures taken by member companies in accordance with the voluntary guidelines on a regular basis, once a year in principle. Through collecting and sharing examples of practices adopted by member companies to improve customer services including measures reflecting the opinions and requests from consumers and improving the PDCA cyclical process within member companies, the LIAJ encourages them to adopt the guidelines in their management.

Development of Manual for Earthquakes and for New Strains of Influenza

To fulfill the social mission of the life insurance industry, the LIAJ takes several measures to continue its important business such as payment of insurance benefits, even in extraordinary situations such as a serious disaster or a pandemic of a new strain of influenza. The LIAJ has created a manual for earthquakes and a manual for new strains of influenza, and revises them based on past experience and in response to the regulatory environment.

3. Our Activities


Measures against Earthquake Disasters

In light of the lessons learnt from the Great East Japan Earthquake, life insurance companies reviewed and improved their countermeasures against disaster as well as their services and business procedures. Each life insurance company reviewed their business continuity plan (BCP) after the earthquake, and is striving to enhance their customer services in ordinary situations.

The LIAJ also set up the Center for Searching for Life Insurance Contracts in Disaster Areas after the Earthquake, and continues to operate it. Under this search system, all member companies search for relevant insurance contracts for people who struggle to claim insurance benefits because they have lost evidence of their contracts in a disaster. Currently, the scope of this system has been expanded to any cases where people have lost evidence of insurance contracts in an area covered by the Disaster Relief Act.

Activities as Authorized Personal Information Protection Organization

The LIAJ was accredited as an Authorized Personal Information Protection Organization by the Financial Services Agency under the Act on the Protection of Personal Information in April 2005. The LIAJ developed the Personal Information Protection Guidelines and provides guidance or recommendations on complying with the guidelines to each member company, and also receives related complaints from customers and shares them with member companies.

2) Initiatives to Ensure Business Soundness and Impartiality

Measures against Moral Hazard

In order to promote sound management of the life insurance system, the industry is striving to prevent moral hazard such as fraud related to hospitalization benefits and fraudulent acquisition of insurance benefits. The main countermeasures are as follows.

Policy Data Registration System

A policy data registration system was established to help detect those trying to receive insurance claims illegally by enrolling in several insurance policies for short periods. When life insurance companies receive an insurance policy (including riders like death benefit and hospitalization benefit), the relevant data of policyholders may be stored at the registration center within the LIAJ. Life insurance companies refer to the registered details to judge whether to accept a contract or whether to pay claims for death or hospitalization benefits.

Policy Data Inquiry System

Life insurance companies and the National Mutual Insurance Federation of Agricultural Cooperatives (Zenkyoren) have jointly operated the Policy Data Inquiry System to contribute to the sound development of life insurance and cooperative systems since April 2002. Under the system, the data held by Zenkyoren and the data registered in the Policy Data Registration System by the LIAJ can be cross-referenced. They refer to the registered details to judge whether to accept a contract or whether to pay claims for death or hospitalization benefits.

Cross Reference System for Assessing Insurance Claims

Upon receiving an insurance claim, participating insurance companies and three co-operatives (National Mutual Insurance Federation of Agricultural Cooperatives, National Federation of Workers and Consumers Insurance Cooperatives and Japanese Consumers' Co-operative Union) cross-reference other organizations' data on policyholders. They then use the information when deciding whether to accept a claim from a policyholder or to terminate or cancel an existing contract.

Liaison Conference between Life Insurers and the Police

In order to prevent the criminal abuse of life insurance, the LIAJ holds liaison meetings with the National Police Agency. The "Liaison Conference between Life Insurers and the Police" is held between the LIAJ's 54 local offices and municipal police headquarters to exchange information on organized crime groups and prevent moral hazard.

3. Our Activities


21

Measures against Anti-social Forces

The LIAJ is committed to cutting off any relations with anti-social forces (ASF). In this regard, the LIAJ is taking measures such as encouraging member companies to add a clause on the elimination of ASF into the policy clauses, establishing a database regarding anti-social forces for member companies' reference, and holding discussions with other organizations in order to dissolve any insurance contracts with ASF or related parties.

Measures against Money Laundering

The LIAJ strives to enhance awareness of the life insurance industry and ensure that thorough actions are taken through, for example, a handbook and list of potential questions and answers as well as revision of a poster to be displayed for customers, to raise life insurance companies' understanding regarding money laundering.

3) Efforts to Stimulate Sound Financial Market

Enhancement of Stock Value

The LIAJ has conducted research on the efforts of listed companies and institutional investors regarding the enhancement of stock value for 41 years since fiscal 1974.

The Japan's Corporate Governance Code entered into force in June 2015, and together with the Japan's Stewardship Code, it is hoped that the Codes will work appropriately and together as "the two wheels of a cart" so as to create a virtuous cycle. In both Codes, it is stated as a common view that engaging in constructive dialogue between companies and investors would be useful in promoting sustainable corporate growth and increasing corporate value. Under the recent significant changes in the environment surrounding the dialogue between them in Japan ,and amid the demands for promoting further dialogue, the LIAJ conducted questionnaire surveys of companies and investors in fiscal 2014, on their awareness and efforts, and published its requests on the setting and announcement of business objectives, the enhancement of shareholder returns, and the improvement of corporate governance.

While the survey results in fiscal 2014 show that both companies and investors are highly motivated to promote opportunities for dialogue more than ever, there still exist difference in perception between them with regard to several questionnaire items, including issues need to be addressed in promoting dialogue. The LIAJ hopes that its research will enhance communication between companies and investors, and thus enhance stock value as well as revitalize stock markets.

4) Improving Compliance and Fostering Human Resources

Educational System

Common-to-Industry Educational System for Life Insurance Solicitors

Under the laws and regulations, tied sales agents and sales representatives at agencies need to be registered with the FSA to sell life insurance products as life insurance solicitors. The LIAJ administers the "General Course Exam" to check the knowledge, quality and capacity of candidates seeking registration. The LIAJ also operates the examination system for the "Professional Course", "Advanced Professional Course" and "College Course" in order to enhance the abilities of solicitors to provide better services to customers. In addition, the LIAJ administers the "Variable Life Insurance Sales Qualification Course Exam" for insurance solicitors to sell variable life insurance/annuities. The LIAJ reviews and enhances the content of the textbooks for those examinations every year.

3. Our Activities


Chart of Common-to-industry Educational System

Training for Professional Course Exam

(2 days, 12 hours or more)

Professional Course Exam

Pass

Life Consultant

Training for Variable Life Insurance Sales

Qualification Exam(2 days, 10 hours or more)

Variable Life Insurance Sales Qualification Exam

Pass

Registration(LIAJ)

Advanced Professional Course Exam

Pass

Senior Life Consultant

College Course Exam

Pass

Total Life Consultant

Orientation(more than 1 day)

Initiation

Pre-registration training

(Min. 8 days, 30 subjects, 32 hours)

General Course Exam

Registration (Regional Finance

Bureau)

Post-registration training period

(Min. 7 days, 15 subjects, 28 hours)

OJT(1 month after registration)

Pass

Purpose and Summary of Each Exam

Exam Purpose Description

General Course To gain a basic knowledge on life insurance required by a tied

sales agent/sales rep at an agency.

・Compliance at the time of soliciting insurance

・Importance of maintenance and services after sales

Professional Course

To acquire more extensive expertise and related knowledge on

insurance solicitation based on the core knowledge gained in

the General Course.

・Knowledge about other financial sectors

・Social security and corporate benefit system

Advanced

Professional Course

To cultivate applicable and practical ability and acquire

comprehensive knowledge essential for financial planning

services.

・Categories of tax and its calculation

・Public pension program

College Course

To further acquire life insurance and related knowledge at an

expert level. This course is the highest course in the

common-to-industry educational system.

・Financial planning

・Study on individual / corporate insurance products

Variable Life

Insurance Sales

Qualification

To acquire knowledge on the characteristics and mechanisms

of variable products.

・Types of variable life insurance and its mechanism

・Prohibited matters and issues in soliciting variable

products

Continuing Education System

The LIAJ has a system for continuous education of all life insurance solicitors once a year in principle so that they can conduct solicitation activities with an emphasis on customer satisfaction and compliance. The LIAJ also conducts follow-up activities every year to enhance the continuing education system.

3. Our Activities


23

Life Insurance Course

This course is for staff engaged in the life insurance business, with the aim of imparting the basic knowledge required to work in the life insurance industry. The course consists of eight subjects: "Introduction to Life Insurance", "Life Insurance Actuarial Science", "Risk Selection", "Contractual Provision and Law", "Life Insurance Products and Sales", "Life Insurance Accounting", "Asset Management" and "Life Insurance and Tax Law". The LIAJ publishes the text and operates the exam for each subject.

Examination for Life Insurance Interviewers

When an applicant applies for a contract, whether to accept the contract is determined based on, including the declaration form or a doctor's medical examination. As a way of determination, the life insurance interviewer interviews the insured and checks their health. The LIAJ administers qualification exam for interviewers.

Examination for Life Insurance Claims Assessors

The LIAJ has been conducting the "Exam for Life Insurance Claims Assessors" since fiscal 2007. This exam encourages staff who handle claims at life insurers to acquire the basic knowledge and good judgment required by the staff with the aim of fostering such human resources, and maintaining and improving their abilities in the light of securing proper payout practices.

5) Activities for Reflecting Consumers' Opinions and Handling of Complaints / Resolving Disputes

Holding Interactive Dialogues on Life Insurance

The LIAJ holds the "Interactive Dialogue on Life Insurance" in cooperation with its local offices and the Japan Institute of Life Insurance (JILI, see page 37) , with the aim of promoting a proper understanding of the life insurance business. In fiscal 2014, the LIAJ held 125 meetings in total with consumers' groups/organizations and journalists. The LIAJ periodically visits such organizations to provide information and hear their opinions on the life insurance industry and the LIAJ's activities.

Operating the Secretariat of Consumers' Opinions

With the aim of reflecting consumers' opinions in the business management of life insurance companies, the LIAJ operates the Secretariat of Consumers' Opinions, which collects and analyzes information such as on counseling or complaints, as well as opinions or requests from consumers received by the LIAJ and opinions of outside experts received at the Arbitration Advisory Committee (see page 25), and then shares the information with member companies. The Secretariat also exchanges information on specific practices of member companies and on findings from their actual business.

Mechanism for reflecting consumers' opinions in the business management of life insurers

Consumers’ Opinions

Secretariat of Consumers’ OpinionsCross-sectoral body within the secretariat of LIAJ

Collect and analyze consumers’ opinions

Life InsuranceConsultation

Center

Secretariatof

LIAJ

JapanInstitution of Life Insurance

ArbitrationCouncil

ArbitrationAdvisoryCouncil Information

sharingComments/Proposals

Consultation Center Council

Members: Responsible officers for consultation

Exchanging information about complaintsSharing best practices

CommitteesEstablished by each issue in chargeMembers: Responsible directors andsenior managers

Sharing informationDiscussing measures if neededReport

Re

flec

t in th

e b

us

ine

ss m

an

ag

em

en

t

3. Our Activities


Life Insurance Consultation Center

The LIAJ was designated by the FSA as a designated dispute resolution body based on the Insurance Business Act, and therefore handles complaints and resolves disputes related to the life insurance business and foreign life insurance business.

In order to conduct those activities, the Life Insurance Consultation Center was established within the LIAJ. The Center aims to raise public understanding of and trust in life insurance as well as help protect policyholders' legitimate interests. The Center implements proceedings promptly and transparently from a fair and neutral position upon receiving an inquiry or complaint about life insurance or an application for dispute resolution procedures. The Center operates its services based on the "Operational Rules for a Designated Dispute Resolution Body for (foreign) Life Insurance Business" which was designated by the FSA.

Appropriate Handling of Inquiries and Complaints Received

In the Life Insurance Consultation Center (including Life Insurance Consultation Office(Tokyo), and the Center's corresponding 53 local offices in every prefecture), expert consultants deal with inquiries and complaints from a neutral position. When the Center receives a request to resolve a complaint, it strives to reach an early settlement such as by making requests for a settlement and by mediating settlements with the life insurers involved.

Number of inquiries and complaints

Fiscal 2013 Fiscal 2014

General Inquiries 6,083 6,067

Complaints 5,463 5,186

Total 11,546 11,253

Operation of Arbitration Council

When a customer files a complaint with the Center, the Center arranges the negotiation between the life insurer involved and the customer to reach a settlement. In principle, if they cannot reach a settlement within one month, the Center convenes the Arbitration Council to resolve the dispute. The Arbitration Council consists of 10 members (4 lawyers, 4 consumer advisors and 2 staff of the Life Insurance Consultation Center) and strives to resolve the dispute appropriately from a fair and neutral position.

3. Our Activities


25

Flow of Procedure to Apply for the Arbitration Council

Arbitration Council

Filing of Complaint

Judging of appropriateness

Receive complaint

Arrange negotiation

Settlement reached

Dispute unresolved

Fact-finding through

documents, hearings, etc.

Deliberation

Preparation/presentation of settlement

proposal

RefusalArbitration completed

by ruling

Settlement reached

Arbitration unsuccessful

Number of Filings for Procedures of the Arbitration Council

FY 2008 2009 2010 2011 2012 2013 2014

Number 82 122 172 260 208 202 194

Establishment of Arbitration Advisory Committee

The Life Insurance Consultation Center established the Arbitration Advisory Committee consisting of external experts such as scholars, lawyers, doctors, representatives of consumer organizations and full-time executives of the LIAJ. In addition to responding to consultations by the Head of the Life Insurance Consultation Center (Chairman of the LIAJ), the Arbitration Advisory Committee makes recommendations and proposals, as appropriate, to ensure fair and smooth operation of the Center's business and the Arbitration Council. The Center has a system for reflecting those recommendations and proposals in the measures of the LIAJ and member companies.

Provision of Information regarding Consultations and Complaints

The Center publishes the annual "Life Insurance Consultation Center Report" and "Overview of Arbitration", which summarize the inquiries and complaints received during the year. To help prevent disputes and their recurrence, the Center also publishes the quarterly "Voice Report", which provides information about inquiries and complaints in categories, their numbers, as well as typical complaints that have been filed. In addition, the LIAJ discloses the number of complaints by company on its website to ensure a neutral, fair and transparent process for complaint handling. The LIAJ will strive to continuously enhance the convenience of users through releasing information on its current activities and its future plans as a designated dispute resolution body.

3. Our Activities


Disclosure of Complaint Information

To help make customers aware of the trend of complaints and how member companies deal with their complaints, the LIAJ discloses information including the number and details of complaints as well as those of payment/non-payment of insurance claims on the LIAJ's and member companies' websites.

6) Activities for Clearly Disclosing Information

Basic Explanation about Life Insurance

The LIAJ posts basic life insurance information and knowledge on its website, covering various topics such as "What is life insurance?", "The mechanism of life insurance", "The mechanism for calculating insurance premiums and insurance dividends".

Quick Search for Life Insurance Products

The LIAJ operates a "Quick Search for Life Insurance Products" on its website so that customers can gather necessary information on the life insurance products. This is linked to product descriptions of life insurers on their websites so that customers can find more details about the products.

Setting of Standards for Disclosure

The Insurance Business Act and other related laws stipulate detailed items to be disclosed by life insurers. The LIAJ has also prepared a set of industry-wide "Standards for Disclosure" with additional items that it considers should be voluntarily added by member companies in the light of usefulness for customers and investors. The LIAJ reviews these standards every year for possible improvement. In addition, it has prepared a guidebook on disclosure by life insurers to help customers understand, because the financial statements of life insurers vary significantly from those in other industries.

Publication of a Summary of Life Insurance Statistics

The LIAJ collects statistics on the life insurance business of all life insurers monthly, quarterly, and annually, and publishes these on its website. In addition, the LIAJ prepares and publishes "Life Insurance Fact Book" which summarizes the key performance of life insurers and the results of the life insurance industry, and "Statistical Data Package of Life Insurance Market in Japan (CD-ROM)" which contains detailed statistical data of life insurers.

c) Contribution to Society

1) Efforts in Achieving Three-Year Plan for Social Services Activities

Social Service Activities

The LIAJ conducts the following industry-wide projects to contribute to society and improve the daily lives of people and social welfare centering on the life insurance industry's ideal of "Spirit of Social Assistance".

Activities to Enhance Family Bonds by Reading Picture Books to Children

Recently, although people tend to value the family which is the basis of the life insurance business, many parents are worried about how to raise their children. Therefore, the LIAJ has engaged in "Activities to Enhance Family Bonds by Reading Picture Books to Children" since fiscal 2008.

In fiscal 2014, the LIAJ helped to hold the "JPIC* Workshop for the Supporters of Reading Picture Books", which provides opportunities for people to spend more time with their families. In fiscal 2014, the workshops were held in 32 regions and the number of participant was3,067 in total. The LIAJ encourages the participants who are planning to hold sessions for reading picture books to children based on what they learned at the workshops, and provides the set of books for the sessions.

* Japan Publishing Industry Foundation for Culture

3. Our Activities


27

Financial Aid for Child-rearing Support Organizations

Recently, as the local community bonds are undermined due to a declining birthrate and the increasing number of nuclear families, growing concerns of parents who feel anxiety about raising their children have become social issues in Japan. In order to contribute to the better community welfare, by facilitating local communities supportive of parents in child rearing, the LIAJ has been providing subsidies to non-profit organizations or groups which support those parents who have preschool children in the community (including expectant mothers). Subsidies totaling approximately 137.1 million yen have been given to 658 groups over the past ten years; the total subsidy was about 14 million yen for 63 groups in fiscal 2014. The LIAJ also provides information on child-rearing support activities by posting those organizations' atmospheres and ingenious practice within the activities through interviews with them on the website, as well as by publishing reports summarizing the activities of the organizations.

Subsidy Program for Elderly Support Organizations

Considering the society of accelerated aging of the population, it is of great importance to establish a society where everyone can enrich their life in good health even in their older age, and to facilitate health promotion so that they can live out their natural life span. As part of its social service activities, the LIAJ has been providing subsidies to private non-profit organizations and groups which engage in activities targeted for the elderly to facilitate health care and health promotion, to promote independence of the elderly and to help them to live a meaningful life since fiscal 2014. The LIAJ decided to provide subsidies to 39 organizations, totaling 5 million yen in fiscal 2014.

Scholarship Program for Education of Care Workers

Care workers play a crucial role in caring for the elderly in today's aging society where the number of people with Certification of Needed Long-Term Care and Needed Support has been increasing. In order to support them, the "Scholarship Program for Education of Care Workers" has been run since fiscal 1989. So far, 4,234 recipients of the scholarship have been sent out into society and many of them are playing leading roles as care workers across the country.

Scholarship Program for International Students in Japan (Seiho Scholarship Program)

Amid ongoing internationalization, this scholarship has been provided to 347 international students from Southeast Asia and East Asia as an international contribution to assist human exchanges. The LIAJ is also promoting these students' understanding of Japan through social events.

Approach to Environmental Issues

The LIAJ is committed to addressing environmental issues by developing the Life Insurance Industry's Action Guidelines for Environmental Issues, the Life insurance Industry's Commitment to a Low Carbon Society, and also by setting a numerical target for reducing electricity consumption as well as sharing information on member companies' efforts. The LIAJ set the reduction target for fiscal 2020 as: "reducing electricity consumption per unit floor area of buildings by an average of 1% per year compared to fiscal 2009" in accordance with the "Nippon Keidanren's Commitment to a Low-Carbon Society", and regarding the target from fiscal 2020 until fiscal 2030, the LIAJ is currently working further to reduce electricity consumption under the level targeted for fiscal 2020.

3. Our Activities


d) LINC (The Life Insurance Network Center)

The life insurance industry established an industry-wide network called the Life Insurance Network Center, or LINC in 1986. This network enables insurers to provide more efficient services and to improve information security in the insurance industry, and also reduces the burden of clerical work for client companies.

With several improvements to the network system since its establishment, the Center currently operates the following 12 systems.

System Outline of Functions

1 Inter-network settlement system

among member companies To enable fund settlement among life insurers.

2 Data exchange system on individual policies whose monthly premiums are collected through payrolls

1

Data exchange system on

individual policies whose monthly

premiums are collected through

payroll deduction

To integrate the data of several life insurers on individual policies

whose premiums are paid by voluntary payroll deductions into each

client company which makes payroll deductions from their employees,

and to share those data between life insurers and client companies.

2

Internet service on individual

policies whose premiums are

collected through payroll

deduction

To exchange data on individual policies whose premiums are paid

through voluntary payroll deduction between life insurers and client

companies which make payroll deductions from their employees on the

Internet.

3 Data exchange system

on asset-formation insurance

To act as an intermediary for exchanging data on asset-formation

insurance.

4 Registration system

on medical care insurance

To register the details of medical care insurance contracts to check

whether the same person is designated as a medical care insured with

several insurance companies.


on licensed life insurance

solicitors

To perform application procedures for registration of licensed life

insurance solicitors by proxy and manage the register.


on policy data

To register the details of contracts to check how many contracts

designate the same person as a beneficiary of hospitalization and death

benefits in order to prevent moral hazard.

7 Data distribution system on

National Pension Fund insurance

To collect and distribute data on National Pension Fund insurance

contracts to life insurers offering the insurance.

8 Data exchange system

on life insurance business

statistics

To collect statistical data from life insurers to prepare materials on the

business performance of the life insurance industry.

9 Data exchange system on joint

Employee's Pension Fund

Insurance Report

To exchange data between life insurers and trust banks to prepare the

joint report on the Employees' Pension Fund.

10 Cross referencing system

for assessing insurance claims

To cross-reference contracts among life insurers when a claim is filed

for insurance benefits and mutual aid money in order to judge whether

to pay the benefits, cancel the contracts or allow the contracts to lapse

in order to prevent moral hazard.

11 Data exchange system on

corporate pension plans among

principal companies

To exchange settlement data on Employees' Pension Funds and

Defined Benefit Corporate Pensions among principal life insurers and

principal trust companies.

12 Statistics collection system on

incidence rates including

mortality

To collect survey data on incidence rates including mortality from life

insurers and prepare statistical materials.

4. The Life Insurance Association of Japan


29

The Life Insurance Association of Japan (LIAJ) started as an incorporated association with formal sanction by the authorities concerned on December 7, 1908. Since then, the Association has continued to make efforts for the sound development of the life insurance industry.

a) Objective

To strive for the sound development of the life insurance industry and maintain its reliability

b) Functions

(a) Research and study of theories and practices relating to life insurance (b) Public relations relating to life insurance (c) Statement on life insurance (d) Other functions considered necessary to attain the purpose of the Association

c) History

1898 ・The Forum of Japanese Life Insurers was founded. 1905 ・The Forum of Japanese Life Insurers was reorganized into the Association of Japanese Life

Insurers. 1908 ・The Association of Japanese Life Insurers was authorized as an incorporated association. 1942 ・The Life Insurance Control Association was founded. The Association of Japanese Life Insurers

was renamed the Life Insurance Network, and most of its operations were transferred to the Life Insurance Control Association.

1945 ・The Life Insurance Council of Japan was founded to take over the operations of the Control Association after it was dissolved. The Life Insurance Network was renamed The Life Insurance Association of Japan (LIAJ). All the operations of the Life Insurance Network were transferred to the LIAJ.

2008 ・The LIAJ marked the 100th anniversary since its foundation.

2014 ・The LIAJ made a transition from an incorporated association to a general incorporated association.

d) Membership

All 41 life insurance companies operating in Japan (As of December 1, 2015)

e) Board Members

Representatives of member companies and full-time officers of the LIAJ (See page 31 for the list of Board Members.)

f) Offices

54 offices (the headquarters in Tokyo and 53 local offices)

g) Number of Employees

266 employees (As of December 1, 2015)

h) Funding

Membership fees and revenues from business activities such as examination business (Budget for fiscal 2014: approx. 5.32 billion yen, of which 3.63 billion yen from membership fees and 1.36 billion yen from revenues from business activities)



Organization Chart

(As of April 1, 2015)

The Life Insurance Association of Japan (LIAJ)

Life Insurance Consultation

Center

Local Committees

Committees Association Office

Auditors

Board of Directors

General Meeting

General Affairs Dept. Public Relations Dept. Administration & Education Dept. Planning Dept. Research Dept.

Joint System Office Life Insurance Consultation Office International Dept. Local Offices (53 Districts)

Arbitration Advisory

Committee

Arbitration Council



31

Board Members

(As of December 31, 2015)

Chairman

Yoshinobu Tsutsui President, Nippon Life Insurance Co.

Vice Chairmen

Akio Negishi President, Meiji Yasuda Life Insurance Company

Directors

Shinichi Hirose Member of the Board, President, Tokio Marine & Nichido Life Insurance Co., Ltd.

Yasunori Kume Representative, CARDIF Assurance Vie

Koichiro Watanabe President, THE DAI-ICHI LIFE INSURANCE COMPANY, LIMITED

Minoru Kudo Representative Director and President, Daido Life Insurance Co.

Tomoo Hagimoto President and Representative Director, Sony Life Insurance Co., Ltd.

Kaoru Takahashi President & CEO, Sompo Japan Nipponkoa Himawari Life Insurance, Inc.

Kazunori Kataoka President, ORIX Life Insurance Corporation

Hitoshi Morita President & CEO, Representative Executive Officer, Manulife Life Insurance Company

Mitsuru Imoto Representative Director and President, MassMutual Life Insurance Company

Yoshiteru Yoneyama President, Fukoku Mutual Life Insurance Co.

Shoichiro Ichitani President and Chief Executive Officer, The Prudential Life Insurance Co., Ltd.

Norimitsu Shimada Executive Vice President, NN Life Insurance Company, Ltd.

Norio Tomono Representative Director, President and COO, AIG Fuji Life Insurance Company, Limited

Tomohiko Komoto Director, Representative Executive Officer, Deputy President and Chief Distribution Officer, AXA Life Insurance Co., Ltd.

Hiroshi Yamauchi President of Aflac Japan, Representative in Japan of Aflac, American Family Life Assurance Company of Columbus

Eiji Hirano Director, Representative Statutory Executive Officer and Vice Chairman, MetLife Insurance K.K.

Hitoshi Ichihara President, Mitsui Sumitomo Aioi Life Insurance Co., Limited

Masahiro Hashimoto President and Chief Executive Officer, Sumitomo Life Insurance Co.

Vice Chairmen

Shizuharu Kubono The Life Insurance Association of Japan (Full-time)

Ichiro Wakasa The Life Insurance Association of Japan (Full-time)

Director

Kazushige Mori The Life Insurance Association of Japan (Full-time)

Auditors

Daisuke Iwase President & COO, LIFENET INSURANCE COMPANY

Hiroshi Takasawa President and Representative Director, Rakuten Life Insurance Co., Ltd.

Yoshiki Sato President, Asahi Mutual Life Insurance Co.

Kazuo Ohtake Attorney at Law



Member Companies (As of December 31, 2015, in alphabetical order)

AEGON Sony Life Insurance Co., Ltd. http://www.aegonsonylife.co.jp/

Aoyama Oval Building, 5-52-2 Jingumae, Shibuya-ku, Tokyo 150-0001

AIG Fuji Life Insurance Company, Limited http://www.aig-fuji-life.co.jp/

Kamiyacho MT building, 4-3-20 Toranomon, Minato-ku, Tokyo 105-8633

Allianz Life Insurance Japan Ltd. http://life.allianz.co.jp/

Anzen Building, 1-6-6 Motoakasaka, Minato-ku, Tokyo 107-0051

American Family Life Assurance Company of Columbus http://www.aflac.co.jp/

Shinjuku Mitsui Building, 2-1-1 Nishi-shinjuku, Shinjuku-ku, Tokyo 163-0456

Asahi Mutual Life Insurance Co. http://www.asahi-life.co.jp/

Asahi Seimei Otemachi Building, 2-6-1 Otemachi, Chiyoda-ku, Tokyo 100-8103

AXA Life Insurance Co., Ltd. http://www.axa.co.jp/

NBF Platinum Tower, 1-17-3 Shirokane, Minato-ku, Tokyo 108-8020

AXA Direct Life Insurance Company Limited http://www.axa-direct-life.co.jp/

8th Floor, KDX Kojimachi Building, 3-3-4 Kojimachi, Chiyoda-ku, Tokyo 102-0083

CARDIF Assurance Vie http://www.cardif.co.jp/

9th Floor, Shibuya Infoss Tower, 20-1 Sakuragaoka-cho, Shibuya-ku, Tokyo 150-0031

Crédit Agricole Life Insurance Company Japan Ltd. http://www.ca-life.jp/

15th Floor, Shiodome Sumitomo Building, 1-9-2 Higashi-Shimbashi, Minato-ku, Tokyo 105-0021

Daido Life Insurance Co. http://www.daido-life.co.jp/

1-2-1 Edobori, Nishi-ku, Osaka-shi 550-0002

Fukoku Mutual Life Insurance Co. http://www.fukoku-life.co.jp/

2-2-2 Uchisaiwaicho, Chiyoda-ku, Tokyo 100-0011

Fukokushinrai Life Insurance Co., Ltd. http://www.fukokushinrai.co.jp/

8-17-1 Nishi-Shinjuku, Shinjuku-ku, Tokyo 160-6132

JAPAN POST INSURANCE Co., Ltd. http://www.jp-life.japanpost.jp/

1-3-2 Kasumigaseki, Chiyoda-ku, Tokyo 100-8798

LIFENET INSURANCE COMPANY http://www.lifenet-seimei.co.jp/

Kojimachi NK Building, 2-14-2, Chiyoda-ku, Tokyo 102-0083

Manulife Life Insurance Company http://www.manulife.co.jp/

3-20-2 Nishi-shinjuku, Shinjuku-ku, Tokyo 163-1430

MassMutual Life Insurance Company http://www.massmutual.co.jp/

2-1-1 Osaki, Shinagawa-ku, Tokyo 141-6023

Medicare Life Insurance Co., Ltd. http://www.medicarelife.com/

5th Floor, Sumitomo-seimei Kiyosumi Park Building, 1-11-12 Fukagawa, Koto-ku, Tokyo 135-0033

Meiji Yasuda Life Insurance Company http://www.meijiyasuda.co.jp/

2-1-1 Marunouchi, Chiyoda-ku, Tokyo 100-0005

MetLife Insurance K.K. http://www.metlife.co.jp/

4-1-3 Taihei , Sumida-ku, Tokyo 130-0012

Midori Life Insurance Company http://www.midori-life.com/

6-3-43 Ohji, Kita-ku, Tokyo 114-8595

Mitsui Life Insurance Company Limited http://www.mitsui-seimei.co.jp/

1-1-20 Aomi, Koto-ku, Tokyo 135-8222



33

Mitsui Sumitomo Aioi Life Insurance Co., Limited. http://www.msa-life.co.jp/

2-27-2, Shinkawa, Chuo-ku, Tokyo 104-8258

Mitsui Sumitomo Primary Life Insurance Company, Limited http://www.ms-primary.com/

16th Floor, Yaesu First Financial Building, 1-3-7 Yaesu, Chuo-ku, Tokyo 103-0028

Nippon Life Insurance Co. http://www.nissay.co.jp/

3-5-12 Imabashi, Chuo-ku, Osaka-shi 541-8501

NN Life Insurance Company, Ltd. https://www.nnlife.co.jp/

26th Floor, New Ohtani Garden Court, 4-1 Kioicho, Chiyoda-ku, Tokyo 102-0094

ORIX Life Insurance Corporation http://www.orix.co.jp/ins/

Akasaka Star Gate Plaza, 2-3-5 Akasaka, Minato-ku, Tokyo 107-0052

Rakuten Life Insurance Co., Ltd. http://www.rakuten-life.co.jp/

Rakuten Crimson House, 1-14-1 Tamagawa, Setagaya-ku, Tokyo 185-0094

SBI Life Insurance Co., Ltd. http://www.sbilife.co.jp/

Shinjuku NS Building, 2-4-1 Nishi-shinjuku, Shinjuku-ku, Tokyo 163-0822

Sompo Japan Nipponkoa Himawari Life Insurance, Inc. http://www.himawari-life.co.jp/

Shinjuku Central Park Building, 6-13-1 Nishi-Shinjuku, Shinjuku-ku, Tokyo 163-8626

Sony Life Insurance Co., Ltd. http://www.sonylife.co.jp/

Shin-Aoyama Building East, 1-1-1 Minamiaoyama, Minato-ku, Tokyo 107-8585

Sumitomo Life Insurance Co. http://www.sumitomolife.co.jp/

1-4-35 Shiromi, Chuo-ku, Osaka-shi 540-8512

THE DAI-ICHI LIFE INSURANCE COMPANY, LIMITED http://www.dai-ichi-life.co.jp/

1-13-1 Yurakucho, Chiyoda-ku, Tokyo 100-8411

The Dai-ichi Frontier Life Insurance Co. Ltd. http://www.d-frontier-life.co.jp/

17th Floor, Osaki Wiz Tower, 2-11-1 Osaki, Shinagawa-ku, Tokyo 141-0032

The Gibraltar Life Insurance Co., Ltd. http://www.gib-life.co.jp/

Prudential Tower, 2-13-10 Nagata-cho, Chiyoda-ku, Tokyo 100-8953

The Neo First Life Insurance Company, Limited http://neofirst.co.jp/

Osaki Wiz Tower, 2-11-1 Osaki, Shinagawa-ku, Tokyo 141-0032

The Prudential Life Insurance Co., Ltd. http://www.prudential.co.jp/


The Prudential Gibraltar Financial Life Insurance Co., Ltd. http://www.pgf-life.co.jp/


Taiyo Life Insurance Company http://www.taiyo-seimei.co.jp/

2-7-1 Nihombashi, Chuo-ku, Tokyo 105-0022

Tokio Marine & Nichido Life Insurance Co., Ltd. http://www.tmn-anshin.co.jp/

Tokio Marine Nichido Building Shinkan, 1-2-1 Marunouchi, Chiyoda-ku, Tokyo 100-0005

T & D FINANCIAL LIFE INSURANCE COMPANY http://www.tdf-life.co.jp/

Shiodome Shibarikyu Building, 1-2-3 Kaigan, Minato-ku, Tokyo 105-0022

Zurich Life Insurance Company Ltd. http://www.zurichlife.co.jp/

16th Floor, Nakano Central Park South, 4-10-2 Nakano, Nakano-ku, Tokyo 164-0001


Appendix

Appendix I. Voluntary Guideline List


35

In order to fulfill social responsibilities and business roles, the LIAJ defines a code of conduct for life insurance companies and their officers/employees to follow and provides voluntary guidelines for practical handling and points to consider, to be reflected in their operations.

Code of Conduct Specifies basic requirements and policies to be followed in member companies’ business management and in senior managers' and employees’

performance to ensure reliability of life insurance business.

<Action Guidelines> Action Guidelines for Environmental Issues

Aims to encourage preserve the environment and to hand over a rich and stable living environment to future generations, acknowledging the importance

of environmental issues as well as the role of the life insurance business in providing security for people with the spirit of cooperation.

Guidelines for Actions against ASF in the Life Insurance Industry

Specifies requirements that should be followed by member companies to cut off any relations with ASF.

Procedural Guidelines for Personal Information Protection in the Life Insurance Business

In accordance with the Act on Protection of Personal Information, guidelines regarding purpose of use, security measurers, and procedures for providing

policyholders with their own personal information upon request.

Practical Guideline for Life Insurers' Security Control Measures to Secure Personal Information Protection

Specifies necessary and appropriate rules and building a system for securely managing personal data

Action Guidelines for Promotion of Active Participation by Women

Aims to share and penetrate action points necessary to promote active participation by women.

Guidelines for Appropriate Representation of Life Insurance Products

Aims to ensure appropriate representation of insurance products in sales materials

Report on the Customer-friendly Solicitation Materials

A report that summarized standard contents to be included and points of attention to make solicitation materials more simplified and easily

understandable, based on the analysis by external experts on solicitation materials of each member company.

Guidelines for System related to Reviewing Materials for Soliciting Life Insurance Products

Specifies information for improving the system related to reviewing materials for soliciting life insurance products

Guidelines for Policy Overview

Specifies how to draft and compile the “Policy Overview” notice, which contains essential information on the contents of insurance products

Guidelines for Important Notices

Specifies how to draft and compile the "Important Notices", which contains warning that insurers should give customers regarding the contents of

insurance contracts

Guidelines for Pre-contract Documentation

Specifies matters to be noted when preparing Policy Overview and Important Notices in concluding contracts for insurance products with strong

investment characteristics such as variable insurance

Guidelines for the Sales of Life Insurance with Market Risks

Specifies appropriate advertising, solicitation, confirmation of customers' intentions, needs or contents of contracts concluded

Guidelines for Obtaining Faithful Disclosure from Customers

Specifies information policyholders must be made aware of to ensure faithful disclosure, and shows samples of sales materials and correctly completed

non-medical report (customers' disclosure). Also specifies suitable sales explanations, content of solicitors' training program.

Guidelines for Appropriate Application or Underwriting of Life Insurance Policies Targeting Minors as the Insured

Specifies reference information for member companies when they undertake life insurance policies targeting minors, especially under the age of 15

Guidelines for Appropriate Insurance Payout Procedures

Aims to promote an appropriate insurance payout control system by clarifying points for prompt and appropriate payout procedures. Also shows suitable

explanations to provide when receiving claims and giving instructions, refusing claims, etc.

Guidelines for Advising Customers on How to File a Claim

Describes the principle of how to handle insurance claims at each company, and provides concrete example of how to advise customers

Guidelines for Designing Medical Certificate Forms

Specifies basic approaches and points of attention in designing medical certificate forms which is necessary upon making claims.

Appendix I. Voluntary Guideline List


Guidelines for Operation of Consumer Credit Group Life Insurance

Specifies appropriate operation of consumer credit group life insurance to ensure fair operation.

Life Insurance Industry's Commitment to a Low Carbon Society

Aims to promote further actions on environmental issues

Voluntary Action Plans on Reducing Electric Consumption

Outlines specific measures to reduce electric consumption.

Guidelines for Life Insurance Services for the Elderly

Outlines basic approaches and points of attention in order to serve the elderly in an appropriate and transparent way at each stage: when concluding a

contract; during the life of the contract; and on the occurrence of insured events/in performing policy procedures.

Guidelines for Insurance Agents to Have Management Systems for Appropriate Solicitation in Place

Summarizes basic approaches and points of attention to properly instruct insurance agents in relation to obligation on insurance agents to have

management systems for appropriate solicitation in place.

Guidelines for Solicitation-related Activities

Summarizes basic approaches and points of attention to properly instruct insurance agents regarding Solicitation-related activities such as the operation

of website for products comparison and products recommendation.

<Others> Standards for Disclosure

The common-to-industry list of items that should be disclosed voluntarily in addition to items that must be disclosed in compliance with laws such as

Insurance Business Act.

Handbook on anti-money laundering and combating the financing of terrorism

Q&A on anti-money laundering and combating the financing of terrorism

Describes money laundering and terrorist financing as well as their countermeasures

Examples of Policy Clauses against ASF

Examples of policy clauses to address ASF for member companies' reference to prevent money to ASF and the related parties through insurance

policies.

Q&A on Revised Insurance Business Act (to be Implemented within 2 Years) in 2014

Potential questions and answers regarding revisions of Cabinet Order, Cabinet Office Ordinance and Comprehensive Guidelines for Supervision of

Insurance Companies that will be implemented/applied from May 29, 2016. (checked by the FSA)

Q&A on Revised Insurance Business Act (to be Implemented within 2 Years) in 2014 (Supplemented Edition)

Additionally summarized points of attention and practical examples to address the revision, based on the revised Cabinet Order, Cabinet Office

Ordinance and Comprehensive Guidelines for Supervision of Insurance Companies and the FSA's idea shown in the public-comment process.

Appendix II. Japan Institute of Life Insurance (JILI)


37

Japan Institute of Life Insurance (JILI) is an independent organization established as a general information center on life insurance. It aims to understand consumer needs for life insurance and to provide accurate information from a neutral standpoint, thus promoting mutual understanding between consumers and the life insurance industry. 1) Providing information on life design and life insurance

Through its website, brochures and e-mail newsletters, the JILI provides information that customers need to know when concluding life insurance contracts and claiming life insurance payments, as well as information on life security, life design, and taxation.

2) Sending instructors to development courses for consumers

The JILI sends instructors to life insurance seminars on how to use life insurance effectively, life design as well as pension and medical care, at the request of consumer related organizations throughout the nation.

3) Strengthening cooperation with consumer related organizations

The JILI holds technical seminars on life insurance for consultants who give advice to the public at consumer centers throughout the nation. In cooperation with the LIAJ, the JILI also exchanges opinions with government organizations and consumer consultants through "Interactive Dialogue on Life Insurance" and works closely with them. The JILI provides "Manual for Life Insurance Consultation" for free for consumer consultants.

4) Supporting education on life design and life insurance

In order to provide opportunities to learn about life design and life insurance, the JILI undertakes activities for students ranging from junior high school to university, including providing and lending supplementary material and holding seminars for students.

5) Holding an essay contest for junior high school students

The JILI holds an essay contest on the theme "Our life and life insurance" for junior high school students every year.

6) Providing advice on life insurance

The JILI responds to general consumer requests and gives easy-to-understand advice on life insurance and life design from a neutral and fair standpoint.

7) Academic promotion of life insurance

The JILI operates a society for the study of life insurance consisting mainly of researchers in the field of insurance science and insurance law, promotes research on life insurance and issues academic publications.

8) Research on the state and awareness of preparations for life security

The JILI researches our actual state (situation of life insurance ownership) and awareness of preparations for life security at three-year intervals and publishes the results for the public. The research data is used by various parties such as researchers and the mass media.

Appendix III. Life Insurance Policyholders Protection Corporation of Japan (LIPPCJ)


The Life Insurance Policyholders Protection Corporation of Japan (LIPPCJ) is a corporate entity that was established on December 1, 1998 based on the Insurance Business Act. All life insurance companies operating in Japan automatically become members of the Corporation.

The LIPPCJ’s mission is to provide financial assistance at the time of bankruptcy of life insurance companies, such as when insurance policies are transferred from an insolvent insurance company or when insurance claims to be compensated are paid (which shall be paid when the insured event occurs before the approval of the reorganization plan), as a mutual assistance scheme for the benefit of policyholders of life insurance companies.

Also, the LIPPCJ acts on behalf of policyholders in following a life insurer’s reorganization proceedings, which includes all actions such as voting by proxy at stakeholders’ meetings that discuss the proposed reorganization plan drawn up by the reorganization trustee. (Note) The LIPPCJ’s scheme of voting by proxy was established to ensure that reorganization proceedings are smoothly completed, and does not prohibit voting by the policyholder.

Role of LIPPCJ under the scheme

When a relief company taking over the insurance contracts of an insolvent insurance company steps forward:

Policyholders

The Life Insurance Policyholders Protection Corporation of Japan

Insolvent Insurance Company

Relief Insurance Company

Member Companies

Payment of compensated claim

Financial assistance for payment of compensated claim

Complete or partial transfer of insurance contract

Merger and acquisition of stock

Contribution

Continue the business regarding transferred contract/

Payment of insurance claim

Financial Assistance



39

When a relief company taking over the insurance contracts of an insolvent insurance company does not step forward:

1. Transfer of contracts to a “bridge-insurance company”

Policyholders

The Life Insurance Policyholders Protection Corporation of Japan


Bridge-Insurance Company

Member Companies



Transfer of contract

Contribution



Loan/Financial assistance

2. Contracts undertaken by the LIPPCJ

Policyholders


The Life Insurance Policyholders Protection

Corporation of Japan

Member Companies



Transfer of contract

Contribution





Scope of the compensation

Insurance contracts to be compensated by the LIPPCJ are as follows: Insurance contracts of life insurers operating in Japan (excluding the special accounts of investment-linked insurance policies such as defined contribution pension plans, group pure endowment insurance and defined benefit corporate pension plans)

Ceilings on the compensations

90% of policy reserves (excluding policies with high expected interest) at the time of bankruptcy

The compensation limit on policies with high expected interest is as follows: 90% - [sum of (each expected assumed interest rate in the past 5 years – the base rate) / 2] of policy reserves

Funding of LIPPCJ for Financial Assistance

1. Accumulation of contributions by pre-funding by life insurance companies (Amount limit of accumulation: 400 billion yen)

2. Government-guaranteed loans in case when the actual payment exceeds the total amount of accumulated contributions by life insurance companies (Amount limit of loans for the industry: 460 billion yen)

Government subsidy is available for the bankruptcy of a life insurance company till the end of March 2017 under certain conditions, in case funds from life insurance companies cannot cover the full amount of necessary financial assistance.

The Life Insurance Association of Japan (LIAJ)

3rd floor, Shin-Kokusai Building, 4-1 Marunouchi 3-Chome,

Chiyoda-ku, Tokyo 100-0005 Japan

Telephone: +81-3-3286-2652 Facsimile: +81-3-3201-6713

http://www.seiho.or.jp/

Published in March 2016

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