5/6/2019“Insurance Forum JAPAN 2019”
Executive Summary
The content in this executive summary was created by The Life Insurance Association of Japan.

On 5 June, 2019, The Life Insurance Association of Japan (LIAJ) hosted the "Insurance Forum JAPAN2019" with the support of the Global Federation of Insurance Associations (GFIA) and The General
Insurance Association of Japan (GIAJ).
The forum consisted of discussion panels based on the following four themes :"Utilising Digital
Technology – Considering Ageing", "Responding to Ageing", "Contribution to Building a ResilientEconomy", and "International Insurance Regulatory Framework from the Perspective of Ageing andBuilding a Resilient Economy".
The summaries of each discussion are as follows;
Opening Remarks
At the opening remarks, Mr. Taro Aso, Deputy Prime Minister, Minister of Finance, and Minister ofState for Financial Services, Japan expressed his expectation that insurance companies have an
important role to play in G20 Priorities, specifically in addressing ageing society and strengthening
economic resilience.
Mr. Juan Pazo, Insurance Superintendent of Argentina, remarked that solidarity is the base of
insurance and that we must narrow the protection gap.
Mr. Toshihide Endo, Commissioner of the Financial Services Agency of Japan, emphasised theimportance of providing insurance products and services, which are elderly-friendly.
1. Utilising Digital Technology – Considering Ageing
The first panel discussed the impact of digitalisation on insurance business in various jurisdictions
around the world, and how digital technology can be utilised to support people to “live better” and notjust “longer.” As ageing is becoming more and more of a global phenomenon rather than a situation
specific to certain areas, many countries have measures to support the elderly population. Thepanellists shared examples of how digital technology is actually being deployed to enhance financial
inclusion of the elderly, who tend to be excluded or left out from the wave of FinTech.

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The panel went on to discuss the importance of prevention by using digital technology, with the supportand encouragement of the regulators who play a key role in establishing a well-balanced environment
for innovative products and services.
While acknowledging that digitalisation is a double-edged sword, where solidarity amongst the insured
may be disrupted due to, for example, mis-selection by biased usage of AI or information asymmetry,the panel was optimistic about technology playing a positive role in promoting rather than inhibiting
financial inclusion. To keep the right balance between knowing more about the customer while avoiding
potential discrimination, a panellist mentioned the role that the regulator can play, for example, setting
up a guideline to make sure that the insurance industry follows the principle of FEAT (Fairness/ Ethics/Accountability/ Transparency) when utilising AI.
Finally, the panel discussed the importance of Private-Public Partnership, and its key role in providing
a holistic approach to solving problems that the industry is facing in the age of digitalisation.
2.

Responding to Ageing

Ageing is a global phenomenon both in developed and developing economies and the pace of global
ageing will accelerate in the coming decades. As the challenges and environment surrounding eachelderly person vary significantly, multi-layered approaches have been contemplated to address theissue.
At first, this panel presented the overview of global ageing and the vulnerability of elderly people withupdated data and facts. Then, pioneering activities to provide elderly-friendly products and services
equipped by innovative technology were shared. The panel also addressed the cutting-edge knowledge,
including financial gerontology, which helps cope with problems caused by deterioration of health,cognitive or physical capacity of elderly people.
This panel emphasised the importance of (1) promoting financial literacy alongside health promotion
with a focus on understanding and mitigating risks, (2) facilitating innovations that improve the living
conditions of elderly people by utilising cutting-edge knowledge, (3) incentivising self-help actions
through tax benefits or subsidy for insurance and pension, and (4) facilitating a regulatory andsupervisory framework which does not disincentivise insurers to provide super-long-term risk coverage.

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3.

Contribution to Building a Resilient Economy

In this panel, the panellists from the public and private sectors discussed how the insurance industry
can contribute to building resilient economies.
Firstly, this panel discussed how the insurance industry can contribute to building economies that areresilient to natural disasters. Where the insurance sector does not provide a full level of protection
against these risks, these risks are often transferred (implicitly) to the state, posing a risk to publicfinances and the broader economy which might result in a delay of financial recovery. The panel agreed
that providing insurance for natural disasters is an important social infrastructure that supports theeconomy and society. The panel also suggested that more open data is needed to provide insurance
coverage to infrastructure.
Secondly, the panel explored the possible steps to help foster robust growth and build more adaptablecommunities through quality infrastructure investment. These themes are highlighted as one of thekey priorities for the Japanese G20 presidency. The panel shared views that there are some challenges
for investors that limit their appetite in rate of return, risk mitigation toolbox such as social safety nets
by governments and business climate including the regulatory landscape. Suggestions provided by thepanellists for policymakers included mechanisms that incentivise investment in quality infrastructure,for example, increasing the rate of return, and creating well-designed regulations.
The panel stressed the importance of the insurance industry’s active engagement. Leadership at
regional and global levels should be demonstrated to boost efforts in building resilient economies.
4.

International Insurance Regulatory Framework from the Perspective of Ageing and Building a
Resilient Economy

In this panel, supervisors and private sector representatives discussed important topics relating to theinternational insurance regulatory framework from the perspective of the previous panel discussions,which are in a high degree of alignment with the IAIS next 5 year strategic plan.
Firstly, this panel discussed the issues of developing regulatory and supervisory frameworks to respondto ageing or to build a resilient economy. Panellists shared the view that regulations and supervision
do not necessarily have to provide incentives, but should not build barriers to providing long-term
products and investing in infrastructure. In terms of the IAIS’ insurance capital standard (ICS), findinga “sweet spot”, i.e. the right balance in pricing of risk in light of a variety of elements, such as financialstability, policyholder protection, and society role of insurance, is critically important. To solve thisissue, dynamical adjustment and flexibility are key. Reflecting new information, considering the3national nature of insurance business, effectiveness of supervisory qualitative requirements, such as
quality of risk management and governance were all mentioned as important challenges to solve.
The panel moved on to a discussion on utilising digital technology in the context of financial inclusion
for the elderly. Panellists discussed whether current regulations are fully sufficient for the digital era,
including because of the recent emergence of non-institution based models and the fact that moreinsurance products can now be bought without any involvement of intermediaries. Additionally, ethicalissues, which could place elderly people in a vulnerable situation, were discussed, together with bias
in data or black box characteristic on the use of AI and big data. Accountability and a company culturethat treats customers fairly should form the over-arching principles that inform a response to thesechallenges. Supervisors should consider following a technology neutral and multidisciplinary basedapproach.

Closing remarks
At the closing remarks, Mr. Recaredo Arias, President of the Global Federation of Insurance
Associations, congratulated the event by stressing the importance of having the Insurance Forum inJapan under the G20 umbrella while at the same time expressing his strong expectation towards future
engagement with the G20 forum.
Conclusion (Key Messages)
 Ageing is a global phenomenon, and it is expected to accelerate in the coming decades. Insurance
industries need to cope with ageing by utilising digital technology to enhance financial inclusion
and to help the elderly people who usually tend to be excluded or left out from the evolution ofFinTech and insurers' financial expertise.
 Responding to the ageing society, it is important to incentivise self-help actions through tax
benefits or subsidy for insurance and pension, and to facilitate a regulatory and supervisory
framework which does not disincentivise insurers to provide super-long-term risk coverage.
 It is recognised that there has been an increase in climate-related disasters in recent years andunfortunately, they affect the lives of many individuals. It is essential that the gap in insurance
coverage and necessary funding are addressed and important that the insurance industry need toboost effort to tackle these challenges.
 To play an important role for these challenges, insurance regulation should create a balance

between a variety of elements such as, financial stability, policyholder protection, protection ofsociety. Finding the balance is not easy, but it is important to keep close relationships between
regulators and insurers.
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