Domestic P&C Insurance Business
Message from the Group CRO

Our Group received two separate business improvement orders from the Financial Services Agency in relation to the premium adjustment practices at our domestic P&C insurance subsidiary and to the responses to the fraudulent auto insurance claims of both our company and the above-mentioned subsidiary. Even though an internal control framework was in place to ensure the appropriateness of the Group’s operations, it was pointed out that there were issues in terms of the effectiveness of the system for monitoring the implementation of key initiatives at that subsidiary, and with respect to communication and reporting between us and the subsidiary.

The internal controls can be deemed as the foundation necessary for the achievement of SOMPO’s Purpose. While developing rules about communication and monitoring is very important to ensure that internal controls are functioning effectively, the most crucial aspect of this effectiveness lies in the values of every officer and employee and the actions taken based on those values. Given the recent incidents and following various discussions, we articulated a set of common values, which we call the “SOMPO’s Values” (Code of Conduct). Going forward, it will be extremely important for the Group to make sure these values embedded within the organization.

In our day-to-day work, we need to make numerous decisions, and at times, we may find ourselves lost about which direction to take due to the situations we are in or the interests involved. Especially as an insurance group that serves the public interest, we are expected to make decisions to high standards. For example, we need to make sure our decisions are ethically and morally appropriate, and that they are fair and just for all our customers.

As a standard for making such decisions, up until last fiscal year we had promoted the pursuit of “integrity.” Integrity means considering what is ethically correct and whether it meets the expectations of society, even in the absence of laws and regulations or internal rules, and doing what is universally seen as right. This fiscal year, to further elaborate on this concept, we implemented a mechanism called “SOMPO’s Yes.”

More specifically, when you are unsure about what action to take, you should ask yourself: “Do you feel comfortable explaining your actions or decisions openly and honestly to society?” “Are you being fair in your dealings with customers and business partners?” “Do you feel comfortable telling your family and friends with confidence?” If you cannot answer “Yes” to all of these questions, you need to stop and reconsider your decision.

Doing the right thing is fundamental, but if signs of misconduct are detected within the organization, it is also crucial that we have a mechanism in place to ensure that accurate information is reliably communicated from the business operations to the management team through the respective reporting lines. On the other hand, even though we have established a whistleblowing system in cases of potential blockages in reporting lines, there is still room for improvement in terms of awareness of the system among officers and employees and the psychological safety related to the use of the system. As such, the system is not necessarily being utilized as widely as it should be.

In light of this situation, we are considering measures aimed at enhancing the effectiveness of the whistleblowing system, such as establishing new channels to more broadly ascertain reports, concerns, and consultations from the employees.

We aim to better detect the early signs of customer protection issues and compliance violations, and create an organization that is capable of self-remediation.

In the new Mid-Term Management Plan that kicked off this fiscal year, our top priority is to regain trust by steadily implementing a business improvement plan in the Domestic P&C Insurance Business, and the entire Group is committed to transforming our corporate culture. In order for the Sompo Group to remain a presence needed and trusted by society, it is crucial that every individual acts with a strong sense of compliance and high ethical standards. It is only through the cumulative actions of many officers and employees that these behaviors will be embedded as the culture of the Group.

It is most important that we, the senior management team, take the lead in instilling an awareness of compliance. With a strong determination across the Group to “build a new company,” we will work resolutely to regain trust on the basis of compliance with laws and regulations, customer-oriented business operations, and the perspectives of society.