Release of Supervisory Guidelines for Insurers Operating in Japan for 2013
The Financial Services Agency of Japan (“JFSA”) determines the principles of financial supervision for insurers operating in Japan. Based on these principles, JFSA establishes and releases supervisory guidelines every year which prescribe required behaviors of insurers and approaches to the supervisory review processes aimed at the insurers operating in Japan. In 2013, JFSA has established the following expected roles for insurers under its concept of financial supervision, which results in three key areas identified for supervision of the insurers as follows:
Expected Roles for Insurers
- Implementation of appropriate and forward-looking risk management, and enhancement of financial soundness to offer insurance guaranty and compensatory function appropriately.
- Development of insurance product, solicitation and claim payment appropriate for aging customers.
- Responsible and prompt management decision, and consideration of mid to long-term management strategy focusing on five to ten years ahead.
Principles of Financial Supervision
- Further deepening of better regulations through open and in-depth communication with financial institutions.
- Risk identification at early stage by promoting systematic and effective integration of on-site and off-site monitoring.
- Supervision supporting voluntary management improvement of financial institutions leading to enhancement of overall level of financial industry.
- Reduction of regulatory cost in mid to long-term
Key Areas1. Appropriate Offer of Insurance Guaranty and Compensatory Function
1-1 Building management framework for appropriate claims payment
1-2 Appropriate supervisory response to the nature of insurers
2-1 Encouragement of enterprise risk management (“ERM”)
2-2 Review of solvency assessment
3-1 Securing business continuity
3-2 Ensuring information security management
3-3 Establishing appropriate insurance solicitation framework
3-4 Enhancing queries and complaints handling systems
3-5 Securing and speeding up effectiveness of product screening
3-6 Preventing fraud
In addition, based on the monitoring policy of financial institutions, JFSA has set a policy to implement the integration of on-site and off-site monitoring in order to better understand actual condition and issues of financial institutions.
Please refer to "FSA Weekly Review No.62 September 9, 2013" page for further information on the supervisory guideline for insurers in Japan for 2013 (Japanese only).