United States General Accounting Office

GAO Briefing Report to the Chairman,

Subcommittee on International Finance,

Committee on Banking, Housing, and

Urban Affairs, U.S. Senate

December 1996 U.S.-JAPAN TRADE

U.S. Company Views

on the Implementation

of the 1994 Insurance

Agreement

G O A

years

1921 - 1996

GAO/NSIAD/GGD-97-64BR

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-275741 

December 20, 1996

The Honorable Christopher S. Bond

Chairman, Subcommittee on International Finance

Committee on Banking, Housing, and Urban Affairs

United States Senate

Dear Mr. Chairman:

Japan is the second largest insurance market in the world, and in fiscal

year 1995 Japanese firms received 96.4 percent of the $400 billion in

annual risk insurance premiums.1

 On October 11, 1994, the United States

and Japan signed an agreement designed to reduce barriers that impede

market access for competitive foreign insurance providers in the Japanese

market. The Office of the U.S. Trade Representative (USTR) has primary

responsibility for negotiating and monitoring the implementation of the

1994 agreement. In response to your request, we are currently reviewing

the implementation of this agreement.

This interim report responds to your specific request for the results of our

survey of U.S. company views on the 1994 insurance agreement. You asked

for this report to be issued as soon as possible after December 15, 1996—a

deadline set by the United States and Japan to resolve their dispute on

how to carry out a key “mutual entry” provision in the 1994 agreement that

deals with the scope and timing of insurance deregulation. On

December 15, 1996, the two countries reached an agreement on the

implementation of this provision, specifying time frames for deregulating

specific insurance product lines.

Our questionnaire was designed to elicit the views of U.S. insurance

providers on (1) actions taken by the government of Japan to implement

key provisions of the 1994 agreement and (2) the impact of these actions

on the company’s ability to compete in the Japanese market. These

provisions included commitments to increase transparency (openness),

deregulation, and competition. There were 15 U.S. insurance providers

operating in Japan in 1996 that were either wholly or majority U.S. owned,

consisting of four life insurance companies, seven non-life insurance

companies, and four insurance brokers. All 15 insurance providers

completed their questionnaires before the United States and Japan

1

Fiscal year 1995 refers to a Japanese fiscal year, beginning April 1, 1995, and ending March 31, 1996.

Japanese market data are from the Foreign Non-life Insurance Association, a foreign trade association

in Japan.

Page 1 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
B-275741 

reached an agreement in December 1996 on how to implement the

provision on mutual entry.

On December 2, 1996, we briefed your staff on the results of our

questionnaire survey. This report summarizes information presented in

that briefing and does not include information on the new commitments

made by the government of Japan in December 1996. As agreed with your

office, a more comprehensive report on the implementation of the 1994

agreement will be issued at a later date.

Background In fiscal year 1995, foreign firms, primarily U.S. insurance providers,

received about 3.6 percent of total risk premium value of Japan’s

insurance market, according to statistics provided by the Foreign Non-life

Insurance Association (FNLIA). This foreign share is small compared to the

foreign share of the U.S. insurance market. While comparable data are not

available for the United States for 1995, the U.S. Department of Commerce

reported that foreign firms in 1994 had a 10.2 percent share of the direct

U.S. insurance market. In 1994, FNLIA reported that the foreign share of the

Japanese market was 3.3 percent. The U.S. data are for the calendar year

and the Japanese data are for a fiscal year. However, these data are the

best available comparisons and are closely comparable.

The Japanese Insurance

Market

The Japanese insurance market has been strictly regulated by the Ministry

of Finance (MOF). For example, MOF oversees the rating bureaus that set

the rates and the type of coverage for many types of insurance

products—giving insurance providers little opportunity to differentiate

their products, according to USTR officials. Further, “keiretsu”—groups of

Japanese firms that maintain close ties through the cross-holding of shares

and exchange of personnel—are active players in the Japanese insurance

market. With these close corporate links, Japanese businesses buy

insurance from firms within their keiretsu—limiting the ability of foreign

insurance providers to distribute their products. In addition, insurance

brokers in Japan operate as insurance agents who sell insurance policies

for insurance companies, whereas brokers in the United States work for

buyers of insurance policies and can create unique policies tailored to the

buyer’s needs by combining coverage from several insurance companies

that are able to offer a variety of rates and types of coverage.

The insurance market in Japan is divided into three sectors. The first

sector consists of standard life insurance products, and the second sector

Page 2 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
B-275741 

consists of standard non-life insurance products (mostly auto and fire

policies). These two sectors combined are called the “primary” sectors;

they represented about 95.2 percent of total insurance risk premiums

collected in fiscal year 1995. Foreign firms captured only 1.8 percent of the

primary sectors in fiscal year 1995, according to FNLIA data.

In addition to the primary sectors, a “third” sector of the Japanese

insurance market includes niche products such as cancer insurance and

personal accident insurance. The third sector represented 4.8 percent of

total Japanese insurance risk premiums in fiscal year 1995. Foreign

companies have been more successful in the third sector than in the

primary sectors, underwriting approximately 39.6 percent of the third

sector risk premium value.

The 1994 Insurance

Agreement

As the Japanese government prepared for the first major reform of its

insurance law in 50 years, the United States and Japan reached an

agreement in 1994 on market access in the insurance sector, entitled

“Measures by the Government of the United States and the Government of

Japan Regarding Insurance.” A principal U.S. goal of the agreement was to

ensure that Japanese insurance reform was not carried out in a way that

would discriminate against the interests of foreign insurance providers in

Japan. The agreement includes measures to provide greater regulatory

transparency and foster and protect product innovation and price

competition in Japan. The agreement also commits the Japanese

government to encourage five public corporations2

 to permit foreign

insurance providers access to their insurance programs and ensure the

allocation of premium shares according to fair, transparent,

nondiscriminatory, and competitive criteria. In addition, the Japanese

government also committed to address issues of competition policy and

market structure that may give rise to anticompetitive business practices.

An important provision in the 1994 agreement, often referred to as the

mutual entry provision,3

 addresses the scope and timing of deregulating

the primary and third sectors. Since the agreement was signed, the United

2

The Government Housing Loan Corporation, the Pension Welfare Service Public Corporation, the

Housing and Urban Development Corporation, the Okinawa Development Corporation, and the

Employment Promotion Corporation.

3

Mutual entry was defined in the 1994 agreement as “the ability of life insurance companies to

introduce existing, new or modified rates, products, or riders in the third sector currently allowed to

non-life insurance companies, and the ability of non-life insurance companies to introduce existing,

new or modified rates, products, or riders in the third sector currently allowed to life insurance

companies.”

Page 3 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
B-275741 

States and Japan have differed in their views on how this provision should

be implemented, resulting in numerous consultations between U.S. and

Japanese leaders and negotiators. In December 1996, the two governments

agreed on when and how the Japanese government would deregulate

specific products in the primary sectors. According to USTR, very limited

entry into the third sector is permitted, but deregulation of the third sector

is dependent upon the deregulation of the primary sectors. Once that

objective is achieved through legislative and regulatory action, then

foreign and smaller insurers will have a 2-1/2 year period to gain a

competitive foothold before the third sector is further opened.

Results in Brief U.S. company responses to our questionnaire and discussions with their

representatives operating in the Japanese insurance market indicated that

the Japanese government has implemented, to varying degrees, many of

the transparency, deregulation, and competition provisions contained in

the 1994 agreement. However, most U.S. insurance providers reported that

these actions did not result in significant liberalization and have had no

effect on their ability to compete in the Japanese insurance market. For

example, most companies reported that their ability to compete in the

major product categories of the primary sectors was limited because of

(1) their continued inability to differentiate the types of coverage they can

offer and the rates they can charge and (2) distribution systems in Japan

that impede their ability to distribute their products.

As the United States and Japan continued to negotiate the implementation

of the mutual entry provision, 9 of the 11 U.S. insurance companies

reported that there would be a negative impact on their ability to compete

in the third sector if subsidiaries of Japanese firms were allowed full

access to sell products in that sector. Only one insurance company

reported that allowing these subsidiaries full access to sell third sector

products would have a very positive impact, and another insurance

company reported no effect.

Six of the eight U.S. insurance companies who participate in the insurance

programs of Japanese public corporations reported that despite the terms

of the agreement, fair, transparent, nondiscriminatory, and competitive

criteria were not being used to allocate premium shares. According to U.S.

companies, only one of the five public corporations has disclosed its

allocation formula. Since the signing of the 1994 agreement, foreign

companies have not significantly increased their small share of this large

market (over $1.2 billion in annual premiums); the foreign share of the

Page 4 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
B-275741 

insurance premiums generated from these five public corporations ranged

from 0.02 percent to 1.3 percent in fiscal year 1995, according to FNLIA

statistics.

The enclosed briefing sections provide (1) a list of U.S. insurance

companies and brokers operating in Japan in 1996 and the premiums

earned by U.S. insurance companies in fiscal year 1995; (2) a summary of

U.S. insurance provider responses to our survey questions on the

implementation of provisions on transparency, deregulation, competition,

and government corporations; and (3) a copy of the questionnaire with the

frequency rates indicating how companies responded to each question.

Agency Comments In commenting on a draft of this report, USTR agreed with the information

presented.

Scope and

Methodology

We reviewed the 1994 U.S.-Japan agreement on insurance and met with

representatives from USTR, U.S. insurance associations, and U.S. insurance

providers to identify key provisions. To obtain U.S. company views on

Japan’s implementation of the 1994 agreement, we distributed a

questionnaire to the 15 U.S. insurance providers (insurance companies and

brokers) operating in Japan that are either wholly or majority U.S. owned.4

 Insurance brokers received a shorter version of the questionnaire, as

some of the provisions did not directly apply to brokers.5

 Our universe did

not include three joint venture companies in which the U.S. partner has a

50 percent or less interest. In requesting company participation in our

survey, we pledged that company responses would be reported in

aggregate form and that we would not link specific responses with the

individual companies.

The questionnaire asked U.S. insurance providers for their views on the

implementation of those provisions for which the companies would have

had first-hand experience. All questions in the questionnaire are

referenced back to their related provision in the agreement. Since the

United States and Japan were still negotiating how Japan would

implement the provision on mutual entry, we asked companies for their

views on the potential impact if the third sector were to be completely

deregulated. After receiving the completed questionnaires, we traveled to

4

Out of this universe of 15 insurance providers, 8 are branches, 6 are wholly owned subsidiaries, and 1

is a subsidiary in which a U.S. company has a majority interest.

5

Brokers did not answer questions 13-17 and 19-35 of the questionnaire.

Page 5 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
B-275741 

Japan and met with company representatives to obtain further information

about implementation issues. In some cases, companies revised their

questionnaire responses, based on explanations provided at our meetings.

While in Japan, we also met with representatives from the Japanese Fair

Trade Commission and foreign trade associations in Japan (FNLIA,

American Chamber of Commerce-Committee on Insurance, and European

Business Community-Insurance Committee). We also collected statistics

on the Japanese insurance market. For fiscal year 1995, we used an

exchange rate of 96.44 yen per U.S. dollar.

We conducted our review between February and December 1996 in

accordance with generally accepted government auditing standards.

As we agreed with your office, unless you publicly announce this letter’s

contents earlier, we plan no further distribution of the letter until 21 days

after the date of issuance. We will then send copies to other interested

congressional committees, USTR, the Secretaries of State and Commerce,

the Chairman of the International Trade Commission, and those firms that

participated in the survey. We will also make copies available to others on

request.

The major contributors to this report were Elizabeth Sirois, Christine

Broderick, Leslie Holen, and Emil Friberg. If you or your staff have any

questions about this report, please contact me at (202) 512-8984.

Sincerely yours,

JayEtta Z. Hecker

Associate Director

International Relations and Trade Issues

Page 6 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Page 7 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Contents

Letter 1

Briefing Section I 

List of U.S. Insurance

Providers Operating

in Japan in 1996

10

Briefing Section II 

Questionnaire

Highlights

12

Summary Observations 12

Transparency 14

Deregulation 16

Deregulation (continued) 18

Deregulation (continued) 20

Deregulation (continued) 22

Competition 24

Government Corporations 26

Briefing Section III 

U.S. Insurance

Provider Responses to

Questionnaire

27

Tables Table I.1: U.S. Insurance Companies and Premium Revenue

Collected in Japanese Fiscal Year 1995

10

Table I.2: U.S. Insurance Brokers 11

Abbreviations

AMA Anti-Monopoly Act

FNLIA Foreign Non-Life Insurance Association

GOJ Government of Japan

MOF Japanese Ministry of Finance

USTR Office of the U.S. Trade Representative

Page 8 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Page 9 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section I 

List of U.S. Insurance Providers Operating in

Japan in 1996

Table I.1: U.S. Insurance Companies

and Premium Revenue Collected in

Japanese Fiscal Year 1995

Dollars in millions

U.S. insurance companies and units Premiumsa

American Family Life Assurance Co.b $5,192.7

American International Group Companies

AIU Insurance Co.c

American Home Assurance Co.c

American Life Insurance Co.b

JI Accident & Fire Insur. Co. (50% U.S. owned)c*

4,610.2

CIGNA

CIGNA Insurance Co.c

INA Life Insurance Co., Ltd. (90% U.S. owned)b

1,113.5

Prudential Life Insurance Co., Ltd.b 800.0

Allstate

Allstate Auto. & Fire Ins. Co. (50% U.S. owned)c*

Saison Life Insurance Co. (50% U.S. owned)b*

580.0

Kemper Insurance Co. Limited

Lumbermens Mutual Casualty Co.c

19.6

Chubb Group of Insurance Companies

Federal Insurance Company-Japanc

8.0

Unum Japan Accident Insurance Co. (new co. in FY94)c 0.6

Liberty Mutual Insurance Co. (new co. in FY95)c 0.1

Total U.S. premiums $12,324.7

Legend

FY=fiscal year

*=Insurance companies that did not participate in the GAO survey.

Note 1: Japan’s 1995 insurance fiscal year begins April 1, 1995, and ends March 31, 1996.

Note 2: Yen premiums were converted to U.S. dollars using an exchange rate of 96.4425 yen per

U.S. dollar based on the International Monetary Fund average market exchange rate for the

second quarter of 1995 through the first quarter of 1996.

Note 3: In cases of partial U.S. ownership of a Japanese insurance operation, GAO calculated a

prorated U.S. share of total company premiums.

aPremiums: for non-life insurance companies these are net direct premiums, including risk plus

savings premiums. Net direct premiums are the total premium received from policy holders. They

do not include net reinsurance premium and are net of cancellations and other returns. For life

insurance companies these are premium income.

bLife insurance company.

cNon-life insurance company.

Sources: Statistics of Life Insurance Business in Japan, 1995, ed. Hoken-kenkyujo (Tokyo, Japan:

Insurance Research Institute) and The Statistics of Japanese Non-Life Insurance Business, 1995,

Annual Special Issue, ed. Hoken-kenkyujo (Tokyo, Japan: Insurance Research Institute).

Page 10 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section I 

List of U.S. Insurance Providers Operating in

Japan in 1996

Table I.2: U.S. Insurance Brokers

Alexander & Alexander of Japan, Inc.

AON Risk Services Companies, Inc.

Johnson & Higgins Japan

Marsh & McLennan Japan, Ltd.

Note: All four insurance brokers participated in the GAO survey.

Page 11 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section II 

Questionnaire Highlights

GAO Summary Observations

The government of Japan (GOJ) has implemented, to 

varying degrees, transparency, deregulation, and 

competition provisions; however most U.S. companies 

reported that GOJ actions did not result in significant 

liberalization and had no effect on their ability to compete 

in the Japanese insurance market.

U.S. companies reported that their ability to compete 

remained limited primarily due to (1) inability to 

differentiate product rate and type for major lines and (2) 

distribution issues.

Since our survey, the United States and Japan reached 

an agreement in December 1996 on how to implement 

the key mutual entry provision, deciding what/when 

deregulation of primary and third sectors will occur.

Page 12 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section II 

Questionnaire Highlights

Page 13 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section II 

Questionnaire Highlights

GAO Transparency

Key provisions: increase access to standards, 

the Ministry of Finance (MOF), and trade 

associations; eliminate information-sharing with 

competitors (questions 1-18).

GOJ actions: U.S. companies generally reported 

improvements in access such as increased 

publication of standards and less GOJ pressure to 

coordinate product applications with other 

companies.

Impact: U.S. companies reported improvements 

in the operating environment; however, little or no 

improvement in ability to compete.

Page 14 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section II 

Questionnaire Highlights

Page 15 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section II 

Questionnaire Highlights

GAO Deregulation

Key provisions: expedite application 

approval for certain non-life products 

(questions 19-23).

GOJ actions: U.S. companies reported 

that three systems to expedite applications 

had been implemented/expanded for eligible 

products; two of the systems had been 

tested, with mixed results.

Impact: U.S. companies reported limited 

impact on ability to compete because a 

small number of products were eligible.

Page 16 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section II 

Questionnaire Highlights

Page 17 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section II 

Questionnaire Highlights

GAO Deregulation

Key provisions: apply flexible rates for certain non-life 

products (questions 24-35, 43-44).

GOJ actions: U.S. companies reported that GOJ 

established new rate categories for eligible products and 

lowered threshold for commercial fire policies that can be 

offered at different rates.

Impact: U.S. companies reported a limited impact on ability 

to compete because (1) companies already had some 

flexibility to set rates for certain products prior to agreement; 

(2) no flexibility had been introduced for major lines such as 

life, property/casualty (including auto); and (3) threshold for 

commercial fire was still too high. Results of recent 

negotiations on mutual entry include the application of 

flexible rates to major product lines.

Page 18 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section II 

Questionnaire Highlights

Page 19 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section II 

Questionnaire Highlights

GAO Deregulation

Key provision: establish a broker system (question 

42).

GOJ actions: framework for broker system 

established, but U.S. companies viewed some 

operating requirements as onerous (e.g., establishing 

separate facilities/computer systems for agents and 

brokers).

Impact: U.S. companies reported no effect to date. 

Some insurance agents took broker exam, but none 

had registered as brokers primarily because of an 

inability to differentiate product rate and type. Some 

insurance companies would like to distribute products 

through brokers; others view brokers as competitors.

Page 20 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section II 

Questionnaire Highlights

Page 21 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section II 

Questionnaire Highlights

GAO Deregulation

Key provision: "mutual entry" provision, sets goals for 

deregulating the primary and third sectors to allow for 

greater competition (questions 45-48).

GOJ actions: GOJ has allowed life and non-life companies 

to set up subsidiaries that may expand Japanese presence 

in the third sector; since our survey, the ongoing dispute on 

what/when deregulation will occur in the primary and third 

sectors was resolved in December 1996.

Impact: 17 Japanese companies established subsidiaries; 

in our survey, 9 of 11 U.S. insurance companies reported 

that there would be a negative impact on their ability to 

compete in the third sector if subsidiaries were granted full 

access to that sector.

Page 22 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section II 

Questionnaire Highlights

Page 23 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section II 

Questionnaire Highlights

GAO Competition

Key provisions: enforce antitrust laws; private 

sector will complete a study of keiretsu relationships 

by April 1995 (questions 51-55).

GOJ actions: U.S. companies reported that GOJ 

had improved its enforcement of the Anti-Monopoly 

Act (AMA); keiretsu study just beginning.

Impact: U.S. companies reported little impact on 

ability to compete, despite improved AMA 

enforcement; companies had low expectations for 

impact of keiretsu study, though most recognized 

keiretsu as a major structural barrier to competition.

Page 24 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section II 

Questionnaire Highlights

Page 25 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section II 

Questionnaire Highlights

GAO Government Corporations

Key provision: encourage foreign participation in 

insurance programs of five public corporations and 

allocate premiums according to fair/transparent criteria 

(questions 49-50).

GOJ actions: one public corporation disclosed its 

allocation formula: 

Impact: most companies that participated in programs 

reported that premiums are still not allocated fairly; 

foreign companies have not significantly increased their 

small share of this large market (over $1.2 billion annual 

gross premiums); foreign share of premiums generated 

from these five public corporations ranged from 0.02 

percent to 1.3 percent in fiscal year 1995.

Page 26 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section III 

U.S. Insurance Provider Responses to

Questionnaire

1

GAO U.S. General Accounting Office

Questionnaire Assessing the Status of the

Implementation of the U.S.-Japan Insurance Agreement

Introduction

The U.S. General Accounting Office, an independent

agency of the U.S. Congress, is assessing the status of

Japan's implementation of the October 11, 1994 bilateral

agreement on insurance-- Measures by the Government of

the United States and the Government of Japan Regarding

Insurance. Congress has asked GAO to: (1) determine

what actions the Government of Japan has taken to

implement the provisions of the agreement; and

(2) describe its impact on the ability of U.S. insurance

companies and brokers to compete in the Japanese market. 

We are sending this questionnaire to your company, as

well as to other U.S. insurance companies and brokers, in

order to obtain information on your experiences since the

agreement was signed.

The questionnaire should be answered by the person most

familiar with your company's operations in Japan. Some

questions are of a detailed nature and may require you to

contact staff in Japan to obtain information on actions

taken by the Government of Japan to implement the

agreement. 

Most of the questions in this survey can be answered by

checking boxes or filling in blanks. A few questions

request a short narrative answer. Along with the

questionnaire we are also sending a copy of the agreement

for your reference as you complete the questionnaire. 

Please refer to the agreement when necessary as you

complete the questionnaire. The various sections and

subsections of the agreement are indicated at various

points in the questionnaire headings and in many of the

individual questions. 

Please base your responses on your direct experience. If

you are uncertain about the response to a question, please

check the "No basis to judge" box. While space has been

provided for additional comments at the end of the

questionnaire, feel free to add comments or explanations

when answering individual questions by writing on the

questionnaire in the adjacent white space. We may be

contacting you at a later time to ask you to elaborate on

some of your responses.

Your responses will be treated confidentially and will not

be used in any way that will identify you or your company. 

Please return the completed questionnaire to GAO by

August 28, 1996. To return the questionnaire, you may

mail it to the following address.

 U.S. General Accounting Office

 301 Howard Street, Suite 1200

 San Francisco, CA 94105-2252

A return envelope is provided for your convenience but can

only be used if you are returning the completed

questionnaire via the U.S. Postal Service. If you are

returning the completed questionnaire from an overseas

office, please fax it to Christine Broderick at (415) 904-

2111. If you have any questions, please call Christine

Broderick at (415) 904-2240 or Leslie Holen at 

(415) 904-2277.

We thank you for your assistance, your participation is

important to our study.

Please enter the following information:

Name of company: ________________________________

Name of person completing the questionnaire: ___________________________

Title: _________________________

Telephone: ____________________ Fax: _____________________

Page 27 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section III 

U.S. Insurance Provider Responses to

Questionnaire

2

Types of companies responding to survey: 4 life companies; 7 non-life companies; 4 brokers.

Note: Numbers entered represent the number of companies selecting a specific response.

PART 1

TRANSPARENCY AND PROCEDURAL PROTECTIONS [Section III]

 

Compilation, Publication, and Standardization of Measures of General Application [Section III (2)]

1. To what extent, if at all, has the Government of Japan published and/or made publicly available licensing, product, and

rate approval standards both before and after the agreement was signed on October 11, 1994? [Section III(2)a(i)] 

(Check one box in each column.) 

Extent to which the Government of Japan published and/or made publicly

available licensing, product, and rate approval standards. . .

 Before the agreement was signed. After the agreement was signed.

To a very great extent 0 To a very great extent 0

To a great extent 0 To a great extent 1

To a moderate extent 1 To a moderate extent 6

To some or little extent 7 To some or little extent 6

To no extent 4 To no extent 1

---------------- ----------------

No basis to judge 1 No basis to judge 0

Not applicable 2 Not applicable 1

2. For those standards that have been published since the agreement was signed, to what extent, if at all, have these

standards provided your company with meaningful (e.g., clear, useful) guidance? (Check one.)

To a very great extent 0

To a great extent 1

To a moderate extent 2

To some or little extent 5

To no extent 4

----------------

No basis to judge 2

Not applicable 1

3. Since the agreement was signed, please approximate the number of times your company has received oral administrative

guidance from the Government of Japan related to the provision of insurance. [Section III(2)a(ii)] (Check one.) 

0 times 6

1 to 9 times 7

10 to 24 times 0

25 to 49 times 0

50 to 74 times 1

75 to 99 times 0

100 or more times 0

----------------

No basis to judge 1

Page 28 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section III 

U.S. Insurance Provider Responses to

Questionnaire

3

4. Since the signing date, how many times has your company requested oral administrative guidance to be delivered in

writing? [Section III(2)a(ii)] (Enter number or "DK" if unknown.)

2 companies @ 1 time

2 companies @ 4 times

_______ Times ö ö ö ö ö If you entered 1 or greater, how many times did the Government of Japan deliver

the administrative guidance in writing? 

1 company @ 2 times

______ Times

 If, when requested, the Government of Japan did not deliver the guidance in writing,

what reason, if any, was given?

________________________________________________________

________________________________________________________

5. Based on your experience, since the signing date, to what extent, if at all, has the Government of Japan stipulated and 

made public those administrative guidances that are applicable to other companies with the same set of conditions? 

[Section III(2)a(iii)] (Check one.)

To a very great extent 0

To a great extent 1

To a moderate extent 1

To some or little extent 6

To no extent 3

----------------

No basis to judge 2

Not applicable 2

Page 29 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section III 

U.S. Insurance Provider Responses to

Questionnaire

4

Advisory Groups [Section III(6)]

6. Since the agreement was signed in October 1994, when the Government of Japan establishes or regularly seeks

recommendations from any Japanese group (i.e., council, association, or other group) related to the provision of

insurance, to what extent, if at all, has a representative from your company attended any of the group's meetings and/or

submitted statements to the group? [Section III(6)] (Check one box in each column.)

Extent to which a representative from your company has:

 attended any of the group's meetings. submitted statements to the group.

To a very great extent 0 To a very great extent 0

To a great extent 4 To a great extent 3

To a moderate extent 5 To a moderate extent 6

To some or little extent 3 To some or little extent 3

To no extent 2 To no extent 2

---------------- ----------------

No basis to judge 0 No basis to judge 0

Not applicable 1 Not applicable 1

7. Since the agreement was signed, when the Government of Japan establishes or regularly seeks recommendations from

any group (i.e., council, association, or other group) related to the provision of insurance, what impact has your

company's input (either through attending group meetings or submitting statements to the group) had on the group's

decisions? [Section III(6)] (Check one.)

Very great impact 0

Great impact 1

Moderate impact 2

Some or little impact 9

No impact 0

----------------

No basis to judge 1

Not applicable 2

Please explain your response: ________________________________________________________________

________________________________________________________________

Page 30 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section III 

U.S. Insurance Provider Responses to

Questionnaire

5

Participation in Industry Groups [Section III(7)]

8. For each Japanese trade and rating association listed below, please indicate the membership status of your company or

company representatives. [Section III(7)a] (Check one box in each row.)

Response categories 

1 = We were a member before the agreement was signed and are still a member

2 = We became a member after the agreement was signed and are still a member

3 = We are in the process of applying for membership

4 = We are interested in becoming a member, but the industry group will not permit it

5 = We are not a member

6 = Not applicable

a. The Life Insurance Association of Japan (JLIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 life companies responded #1

b. The Marine & Fire Insurance Assn. of Japan, Inc. (JNLIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 non-life companies responded #2

c. The Fire & Marine Insurance Rating Association of Japan . . . 3 non-life companies responded #1 & 3 non-life companies responded #2

d. The Automobile Insurance Rating Association of Japan . . . 3 non-life companies responded #1 & 2 non-life companies responded #2

e. The Japanese Hull Insurers' Union . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . No companies belong

f. Japan Institute of Life Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 life companies responded #1 & 1 life company responded #2

g. Life Insurance Underwriters Association of Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 life company responded #1

h. The Research Institute of Life Insurance Welfare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . No companies belong

i. Independent Insurance Agents of Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 non-life company responded #2

j. The Non-Life Insurance Institute of Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 non-life company responded #2

k. The Institute of Actuaries of Japan . . . . . . . . . . . . . . 4 life and 2 non-life companies responded #1 & 1 non-life company responded #2

l. Union of Machinery Insurers of Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 non-life company responded #1

m. The Japan Atomic Energy Insurance Pool . . . . . . . . . . . . . 3 non-life companies responded #1 and 1 non-life company responded #2

n. The Japanese Aviation Insurance Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . No companies belong

o. Other-Specify: ________________________ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . No company indicated “other”

Note: No brokers belong to any of these industry groups.

Page 31 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section III 

U.S. Insurance Provider Responses to

Questionnaire

6

9. For each trade and rating association listed below, please indicate the extent to which, if at all, your company is accorded

privileges and opportunities equal to those accorded to Japanese member firms? [Section III(7)b] 

(Check one box in each row.)

To a very To a To a To some To Not 

great great moderate or little no applicable, 

extent extent extent extent extent not a 

member

a. The Life Insurance Association of Japan (JLIA) 2 1 1

b. The Marine & Fire Insurance Association of

 Japan, Inc. (JNLIA) 1 1

c. The Fire and Marine Insurance Rating 

 Association of Japan 5 1

d. The Automobile Insurance Rating Association 

 of Japan 4 1

e. The Japanese Hull Insurers' Union

f. Japan Institute of Life Insurance 2 1 1

g. Life Insurance Underwriters Assn. of Japan 1

h. The Research Institute of Life Insurance Welfare

i. Independent Insurance Agents of Japan 1

j. The Non-Life Insurance Institute of Japan 1

k. The Institute of Actuaries of Japan

 (Note: 1 member company did not respond.) 1 1 4

l. Union of Machinery Insurers of Japan 1

m. The Japan Atomic Energy Insurance Pool 1 2 1

n. The Japanese Aviation Insurance Pool

o. Other-Specify: ____________________

Page 32 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section III 

U.S. Insurance Provider Responses to

Questionnaire

7

Any comments regarding membership and privileges in Japanese trade and rating associations?

__________________________________________________________________________________________

__________________________________________________________________________________________

Access to Insurance Regulatory Information [Section III(8)]

10. To what extent, if at all, do you believe the Government of Japan has accorded your company meaningful and fair

opportunities to be informed of, comment on, and/or exchange views with Japanese officials regarding insurance laws,

ordinances and/or regulations both before and after the agreement was signed on October 11, 1994? [Section III(8)b] 

(Check one.)

Extent to which the Government of Japan has accorded your company

meaningful and fair opportunities to be informed of, comment on, and/or

exchange views with Japanese officials regarding insurance

laws, ordinances, and/or regulations. . .

 Before the agreement was signed. After the agreement was signed.

To a very great extent 0 To a very great extent 0

To a great extent 1 To a great extent 2

To a moderate extent 6 To a moderate extent 8

To some or little extent 2 To some or little extent 4

To no extent 5 To no extent 0

---------------- ----------------

No basis to judge 0 No basis to judge 1

Not applicable 1 Not applicable 0

Any comments regarding this issue? ________________________________________________________________

11. Before the agreement was signed on October 11, 1994, how would you characterize the level of access to information on

regulatory changes in the insurance sector accorded to your company by the Government of Japan in comparison to that

accorded to Japanese companies? [Section III(8)c] (Check one.)

Before the agreement was signed our company's level of access to information on regulatory changes in the insurance

sector was. . .

Much better than that accorded to Japanese companies 0

Somewhat better than that accorded to Japanese companies 0

About the same as that accorded to Japanese companies 6

Somewhat worse than that accorded to Japanese companies 2

Much worse than that accorded to Japanese companies 6

----------------

No basis to judge 0

Not applicable 1

 

Page 33 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section III 

U.S. Insurance Provider Responses to

Questionnaire

8

12. Would you say that your company's level of access to information on regulatory changes in the insurance sector 

compared to that accorded to Japanese companies got better, worse, or stayed about the same after the agreement was

signed? [Section III(8)c] (Check one.) 

After the agreement was signed our company's level of access to information on regulatory changes in the insurance

sector became. . .

Much better than that accorded to Japanese companies 0

Somewhat better than that accorded to Japanese companies 0

About the same as that accorded to Japanese companies 8

Somewhat worse than that accorded to Japanese companies 4

Much worse than that accorded to Japanese companies 3

----------------

No basis to judge 0

Not applicable 0

 

Any comments regarding this issue? ________________________________________________________________

Procedural Protection for Notifications and Applications [Section III(9)] 1

13. Since the agreement was signed on October 11, 1994, how many times have you filed notifications and/or applications 2

with the Government of Japan to: (Enter numbers. If none, enter 0. If all zeros entered, skip to question 18. )

 

license a new business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 applications filed 

sell a new-to-market product . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 applications filed 

revise a company exclusive product form . . . . . . . . . . . . . . 0 notifications filed 6 applications filed 

revise a company exclusive product rate . . . . . . . . . . . . . . . . 2 notifications filed 5 applications filed 

sell an industry standard product . . . . . . . . . . . . . . . . . . . . . . 0 notifications filed 30 applications filed 

revise an industry standard product form . . . . . . . . . . . . . . . 7 notifications filed 63 applications filed 

revise an industry standard product rate . . . . . . . . . . . . . . . 35 notifications filed 73 applications filed 

Remember, if "0" entered for all above categories, skip to question 18. 

 Note: Questions 13 through 17 were not included in the broker questionnaire. 1

 These numbers represent aggregate data. Most applications/notifications were filed by non-life companies, 2

 except for new-to-market product applications.

Page 34 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section III 

U.S. Insurance Provider Responses to

Questionnaire

9

14. To what extent, if at all, do you believe the Government of Japan has improperly revealed information considered to be

secret (i.e., information not generally available to the public) in connection with your company's applications or

notifications for insurance licenses, products, or rates both before and after the agreement was signed on October 11,

1994? [Section III(9)a] (Check one box in each column.)

Extent to which the Government of Japan has improperly revealed information

 considered to be secret in connection with your company's applications or 

notifications for insurance licenses, products, or rates . . .

 Before the agreement was signed. After the agreement was signed.

To a very great extent 0 To a very great extent 0

To a great extent 1 To a great extent 0

To a moderate extent 1 To a moderate extent 0

To some or little extent 0 To some or little extent 0

To no extent 4 To no extent 5

---------------- ----------------

No basis to judge 4 No basis to judge 6

Not applicable 1 Not applicable 0

Please explain your response: _______________________________________________________________

_______________________________________________________________

15. Since the agreement was signed has your company attempted to apply for more than one license or product approval

(e.g., rate and form) at the same time? [Section III(9)b] (Check one.)

 

Yes 8 ö ö ö ö ö ö Did the government of Japan accept your multiple applications for license or product

approval? (Check one.)

Yes 6

 No 1

-------------

No basis to judge 1

No 3

-------------

No basis to judge 0

Page 35 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section III 

U.S. Insurance Provider Responses to

Questionnaire

10

16. To what extent, if at all, do you believe the Government of Japan encouraged your company to coordinate or consult with

any other insurance providers, insurance associations, or other third parties regarding your notification and/or

applications (including product, rate, or license approvals) both before and after the agreement was signed? 

 [Section III(9)c] (Check one box in each column.)

Extent to which you believe the Government of Japan encouraged your company 

to coordinate or consult with any other insurance providers, insurance associations, 

or other third parties regarding your notification and/or applications

(including product, rate, or license approvals) . . .

 Before the agreement was signed. After the agreement was signed.

To a very great extent 2 To a very great extent 0

To a great extent 2 To a great extent 0

To a moderate extent 0 To a moderate extent 1

To some or little extent 3 To some or little extent 3

To no extent 3 To no extent 6

---------------- ----------------

No basis to judge 0 No basis to judge 1

Not applicable 1 Not applicable 0

17. To what extent, if at all, do you believe the Government of Japan conditioned or delayed the acceptance, processing, or

approval of your company's notification or application (including product, rate, or license approval) based on whether

you consulted or coordinated with other insurance providers, insurance associations, or third parties both before and

after the agreement was signed? [Section III(9)c] (Check one box in each column.)

Extent to which you believe the Government of Japan conditioned or delayed 

the acceptance, processing, or approval of your company's notification or application 

(including product, rate, or license approval) based on whether you consulted or

coordinated with other insurance providers, insurance associations, or third parties . . .

 Before the agreement was signed. After the agreement was signed.

To a very great extent 2 To a very great extent 0

To a great extent 2 To a great extent 0

To a moderate extent 0 To a moderate extent 1

To some or little extent 3 To some or little extent 2

To no extent 3 To no extent 7

---------------- ----------------

No basis to judge 0 No basis to judge 1

Not applicable 1 Not applicable 0

Page 36 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section III 

U.S. Insurance Provider Responses to

Questionnaire

11

Transparency and Procedural Protections Summary [Section III]

18. Overall, to what extent, if at all, do you believe the actions taken by the Government of Japan to improve transparency

and procedural protections for notifications and applications have increased your company's ability to compete in the

Japanese insurance sector? (Check one.)

To a very great extent 0

To a great extent 0

To a moderate extent 2

To some or little extent 0

To no extent 9

----------------

 No basis to judge 1

 Too soon to tell 3

Please explain your response: _______________________________________________________________

_______________________________________________________________

DEREGULATION MEASURES [Section IV]

Product and Rate Approval [Section IV(1)] 1

19 a. Does your company offer any of the following types of insurance? [Section IV(1)c] (Check one box in each row) 2 

Yes No

Credit card burglary/theft insurance 5 2

Boiler/machinery insurance 4 3

Computer comprehensive insurance 3 4

Movable comprehensive insurance 6 1

Directors and officers liability insurance 5 2

 Note: Questions 19 through 35 were not included in the broker questionnaire. 1

 Responses represent non-life insurers only. 2

Page 37 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section III 

U.S. Insurance Provider Responses to

Questionnaire

12

19b. Since October 1994, has your company attempted to use a file and use system put into place by the Government of 1 2

Japan? [Section IV(1)c] (Check one.)

 3 No, company has not attempted to use a file and use system ö Skip to question 20.

 4 Yes ö ö ö For those specific types of insurance where your company attempted to use a file and use system,

regardless of whether the product was disapproved by the MOF, please indicate whether MOF

adhered to the process. (Check all that apply.)

MOF adhered to process MOF did not adhere to process

 Credit card burglary/theft insurance 2 Credit card burglary/theft insurance 0

 Boiler/machinery insurance 2 Boiler/machinery insurance 0

 Computer comprehensive insurance 0 Computer comprehensive insurance 1

 Movable comprehensive insurance 0 Movable comprehensive insurance 1

 Directors and officers liability Directors and officers liability

 insurance 2 insurance 0

 Other: _________________ 2 Other: __________________ 0

To what extent, if at all, do you believe the file and use system has improved your company's ability to compete in

Japan? (Check one.)

To a very great extent 0

To a great extent 0

To a moderate extent 0

To some or little extent 1

To no extent 1

----------------

No basis to judge 0

Too soon to tell 2

___________________

 Responses represent non-life insurers only. 1

Under file and use, the Government of Japan approves a product as eligible for file and use. Subsequently, any company 2 

 approved by the Government of Japan to write that product may introduce changes to the profuct and begin using the

 changed product after a certain short time period unless the Government of Japan disapproves. 

Page 38 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section III 

U.S. Insurance Provider Responses to

Questionnaire

13

20. Since October 1994, has your company applied for a product where the Government of Japan expedited the review of

your application for product approval because the product was essentially the same as a product already approved by

another insurance provider? [Section IV(1)c] (Check all that apply)

5 No, my company never applied for the approval of a product that was 

 essentially the same as a product already approved by another insurance provider. --> Go to question 21.

4 Yes, my company applied for the approval of a product that

 was essentially the same as a product already approved by 

 another insurance provider, but the application was not expedited . ö Please indicate the types of 

 insurance products:

______________________________

______________________________ 

3 Yes, my company applied for the approval of a product that

 was essentially the same as a product already approved by 

 another insurance provider, and my company's product approval

 application was expedited . ö ö ö ö ö ö ö ö öö Please indicate the types of insurance products:

______________________________

______________________________

To what extent, if at all, do you believe the

expedited approval system has improved

your company's ability to compete in Japan? 

(Check one.)

To a very great extent 0

To a great extent 0

To a moderate extent 1

To some or little extent 1

To no extent 1

----------------

No basis to judge 0

Too soon to tell 0

Page 39 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section III 

U.S. Insurance Provider Responses to

Questionnaire

14

21. Does your company offer insurance for certain large commercial risks, including hull, cargo, and/or aviation insurance 1

that are eligible to use a notification system of approval?

[Section IV(1)c(iv)] (Check one box in each row.)

Yes No 2

Hull insurance 2 5

Cargo insurance 2 5

Aviation insurance 1 6

Other large commercial risk insurance

Specify: ____________________ 2 5

 If all "No" responses, skip to question 23. 

22. Since October 1994, has your company attempted to use a notification approval system for certain large commercial 1

risks, including hull, cargo, and/or aviation insurance? [Section IV(1)c(iv)] (Check one.)

2 No, my company has not attempted to use a 

 notification approval system for large commercial risks ö Skip to question 23.

0 Yes ö For those specific types of insurance where your company attempted to use a notification approval

system, regardless of whether the product was disapproved by the MOF, please indicate whether MOF

adhered to the process. (Check all that apply.)

MOF adhered to the process MOF did not adhere to the process

 Hull insurance Hull insurance

 Cargo insurance Cargo insurance

 Aviation insurance Aviation insurance

 Other: ________________________ Other: ________________________

To what extent, if at all, do you believe the notification approval system for certain large commercial

risks, including hull, cargo, and/or aviation has improved your company's ability to compete in Japan? 

(Check one.)

To a very great extent

To a great extent

To a moderate extent

To some or little extent

To no extent

----------------

No basis to judge

Too soon to tell

 Responses represent non-life insurers only. 1

 Only 2 companies offer these products. 2

Page 40 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section III 

U.S. Insurance Provider Responses to

Questionnaire

15

23. Overall, to what extent, if at all, do you believe that the Government of Japan has implemented steps to expedite and

simplify the application and notification process for the approval of insurance products and rates (questions 19-22) since

the agreement was signed? [Section IV(1)b(i)] (Check one.)

 

To a very great extent 0

To a great extent 0

To a moderate extent 2

To some or little extent 5

To no extent 3

----------------

No basis to judge 1

24. Does your company offer bankers blanket insurance or earthquake riders written on industrial fire insurance? 1

 (Check one.)

5 Yes ö Continue with question 25.

2 No ö Skip to question 26.

25. Since October 1994, has your company used the rate flexibility provided by benchmark rates for bankers blanket 1

insurance or earthquake riders written on industrial fire insurance? [Section IV(1)c] (Check all boxes that apply.)

Used rate flexibility provided by benchmark rates on:

a. bankers blanket insurance . . . No 4

 Yes 1

b. earthquake riders on

 industrial fire insurance . . . No 2

Yes 3 

26. Does your company offer windstorm and flood riders written on industrial fire insurance or travellers check 1

comprehensive insurance? (Check one.)

 5 Yes ö Continue with question 27.

 2 No ö Skip to question 28.

27. Since October 1994, has your company used free rates for windstorm and flood riders written on industrial fire insurance 1

or travellers check comprehensive insurance?[Section IV(1)c] (Check all boxes that apply.)

Used free rates on: 

a. windstorm and flood

 riders written on industrial

 fire insurance . . . . . . . . . No 2

Yes 3

b. travellers check

 comprehensive

 insurance . . . . . . . . No 5

Yes 0

 Responses represent non-life insurers only. 1

Page 41 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
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U.S. Insurance Provider Responses to

Questionnaire

16

28. Overall, to what extent, if at all, do you believe that the Government of Japan has expanded the types of non-life 1

products that your company can offer using the flexibility provided by benchmark or free rates since the agreement was

signed? [Section IV(1)b(ii)] (Check one.)

To a very great extent 0

To a great extent 0

To a moderate extent 2

To some or little extent 3

To no extent 1

----------------

No basis to judge 1

Not applicable 0

29. Does your company offer fire insurance for commercial risk in Japan? (Check one.) 1

5 Yes ö Continue with question 30.

2 No ö Skip to question 35.

30. Before the agreement was signed, when the discount rate eligibility threshold was higher, did your company offer large 1

commercial fire insurance that was eligible to use a discount rate? [Section IV(1)c] (Check one.)

Yes 3

No 1

Note: 1 company that offers fire insurance for commercial risk was not operating in Japan before the agreement was signed.

31. Since the agreement was signed and the threshold was lowered, does your company offer large commercial fire insurance 1

that is eligible to use a discount rate? [SectionIV(1)c] (Check one.)

1 No

4 Yes ö To what extent, if at all, has this change improved your company's ability to compete in Japan?

 (Check one.)

To a very great extent 0

To a great extent 0

To a moderate extent 0

To some or little extent 2

To no extent 2

----------------

No basis to judge 0

Too soon to tell 0

 Has your company used an expanded discount rate? (Check one)

Yes 3

 No 1

 Responses represent non-life insurers only. 1

Page 42 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
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U.S. Insurance Provider Responses to

Questionnaire

17

32. Before the agreement was signed, did your company offer a deductibles rider to a large commercial fire insurance policy? 1

[Section IV(1)c] (Check one.)

Yes 3

No 1

Note: 1 company that offers fire insurance for commercial risk was not operating in Japan before the agreement was signed.

33. Since the agreement was signed, and the minimum insured amount for attaching deductibles riders was decreased, does 1

your company offer a deductibles rider to a large commercial fire insurance policy? [Section IV(1)c] (Check one.)

2 No

3 Yes ö To what extent, if at all, has this change improved your company's ability to compete in Japan? 

 (Check one.)

 To a very great extent 0

 To a great extent 0

 To a moderate extent 0

 To some or little extent 1

 To no extent 2

 ----------------

 No basis to judge 0

 Too soon to tell 0

34. Since October 11, 1994, has your company used an "advisory rate" system to set the price of large commercial fire 1

insurance ? [Section IV(1)c] (Check one.)

4 No ö Please list the reason(s) why your company has not used an "advisory rate" system

____________________________________________________________________

____________________________________________________________________

1 Yes ö To what extent, if at all, has the advisory rate system improved your company's ability to compete in

Japan? (Check one.)

To a very great extent 0

To a great extent 0

To a moderate extent 0

To some or little extent 1

To no extent 0

----------------

No basis to judge 0

Too soon to tell 0

 Responses represent non-life insurers only. 1

Page 43 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
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U.S. Insurance Provider Responses to

Questionnaire

18

35. Has your company submitted an application for product approval using data collected outside of Japan? [Section IV(1)c] 

(Check one.)

6 No ö Go to question 36.

4 Yes, data submitted and accepted ö Please indicate the type(s) of insurance.

 __________________________________________________________

To what extent, if at all, has this improved your company's ability to compete

in Japan? (Check one.)

To a very great extent 0

To a great extent 0

To a moderate extent 3

To some or little extent 0

To no extent 0

----------------

No basis to judge 0

Too soon to tell 1

1 Yes, data submitted but not accepted ö Please indicate the type(s) of insurance.

 Note: Application is pending.

 

 _________________________________________________

 _________________________________________________

Page 44 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
Briefing Section III 

U.S. Insurance Provider Responses to

Questionnaire

19

Licensing of Insurance Providers and Intermediaries - [Section IV(2)]

36. Has the Government of Japan set forth in laws and regulations the standards regarding licenses to sell insurance,

including the requirements regarding the applicant's financial base and the qualifications of its management?

[Section IV(2)e] (Check one.)

Yes 13

No 2

----------------

No basis to judge 0

37. Has the Government of Japan stipulated and made public the standard review period concerning applications for licenses

to sell insurance? [Section IV(2)b] (Check one.) 

Yes 12

 No 1

----------------

No basis to judge 2

38. Has your company applied to the Government of Japan for a license to sell insurance since October 1994? (Check one.) 

 2 Yes ---> Continue with question 39.

13 No ---> Skip to question 42.

39. Did the Government of Japan require your company to introduce an insurance product not yet offered in Japan as a 1

condition for the approval of your company's application to provide insurance? [Section IV(2)f] (Check one.)

Yes 0

No 2

 This question was not included in the broker questionnaire. 1

40. Please estimate the number of weeks that passed between the date your company began the pre-application negotiation

process with MOF for a license and MOF's application receipt date? [Section IV(2)c] (Enter number of weeks and the

type of insurance application.)

 Number of weeks: ________ . . . 1 company @ 30 weeks, 1 company @ 36 weeks 

Type of insurance application: ______________________________ 

41. Please estimate the number of weeks that passed between MOF's application receipt date and the date that MOF

provided your company with a decision to approve or disapprove your license? [Section IV(2)c] 

(Enter number of weeks and the type of insurance application.)

 Number of weeks: ________ . . . 1 company @ 9 weeks, 1 company @ 2 weeks 

Type of insurance application: ______________________________ 

Page 45 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
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U.S. Insurance Provider Responses to

Questionnaire

20

Insurance Brokers [Section IV(3)]

42. Overall, has the Government of Japan's decision to recognize and license brokers had a positive effect, a negative effect,

or no effect on your company's ability to distribute insurance? [Section IV(3)b] 

(Check one and explain your response.)

Very positive effect 0

Generally positive effect 0

No effect 8

Generally negative effect 0

Very negative effect 0

----------------

 No basis to judge 1

 Too soon to tell 6

Please explain your response. _____________________________________________________________________

____________________________________________________________________________________________

42b. Since the agreement was signed, has your company applied for a brokers license in Japan? (Check one.) 1

Yes 0

No 4

 This question asked of brokers only. 1

Deregulation Measures Summary [Section IV]

43. To what extent, if at all, have the deregulatory actions taken by the Government of Japan increased your company's

ability to differentiate your product rates, differentiate your product forms, and distribute insurance products? 

(Check one box in each row.)

Extent to which the deregulatory

actions taken by the Government

of Japan increased your

company's ability to . . .

To a very To a To a To some To No basis Too 

great great moderate or little no to judge soon to

extent extent extent extent extent tell

differentiate product rates 1 4 6 2 2

differentiate product forms 1 5 4 3 2

 distribute insurance products 2 9 1 3

Page 46 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
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U.S. Insurance Provider Responses to

Questionnaire

21

44. Overall, do you believe the deregulatory actions taken by the Government of Japan to implement the agreement

(excluding those actions related to mutual and cross entry ) have had a positive effect, a negative effect, or no effect on

your company's ability to compete in Japan? (Check one.)

Very positive effect 0

Generally positive effect 0

No effect 10

Generally negative effect 1

Very negative effect 0

----------------

No basis to judge 0

Too soon to tell 4

Please explain your response: _________________________________________________________________

 _________________________________________________________________

MUTUAL AND CROSS ENTRY PROVISIONS [Section IV(1)d]

GAO recognizes that there are ongoing negotiations between the governments of the United States and Japan regarding the

mutual and cross entry provisions of the bilateral agreement. Nevertheless, GAO would like to collect your company's views

on actions taken by the Government of Japan to date regarding deregulation (not including negotiation proposals that have

been under consideration) .

45. In your opinion, to what extent, if at all, do you believe that a substantial portion of the primary sectors (life and non-life)

has NOT been deregulated? [Section IV(1)d] (Check one box in each column.) 

Primary Life Primary Non-life

To a very great extent 4 To a very great extent 8

To a great extent 2 To a great extent 3

To a moderate extent 0 To a moderate extent 0

To some or little extent 0 To some or little extent 0

To no extent 1 To no extent 0

---------------- ----------------

No basis to judge 0 No basis to judge 0

Too soon to tell 0 Too soon to tell 0

Not involved in sector 8 Not involved in sector 4

Any comments regarding this issue? ______________________________________________________

______________________________________________________

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22

46. Since the agreement was signed, in your opinion, to what extent, if at all, has your company been able to compete on

equal terms in major product categories in the primary sectors (life and non-life) through the flexibility to differentiate,

on the basis of risk insured, the rates, forms, and distribution of products? [Section IV(1)d] 

(Check one box in each column.) 

Primary Life Primary Non-life

To a very great extent 0 To a very great extent 0

To a great extent 0 To a great extent 0

To a moderate extent 0 To a moderate extent 0

To some or little extent 2 To some or little extent 1

To no extent 3 To no extent 9

---------------- ----------------

 No basis to judge 1 No basis to judge 1

Too soon to tell 1 Too soon to tell 0

Not involved in sector 8 Not involved in sector 4

Any comments regarding this issue? ______________________________________________________

______________________________________________________

47. In your opinion, would allowing non-life subsidiaries of life insurance companies full access to sell products in the nonlife third sector have a positive effect, a negative effect, or no effect on your company's ability to compete in the third

sector? (Check one.)

Very positive effect 1

Generally positive effect 1

No effect 4

Generally negative effect 2

Very negative effect 5

----------------

No basis to judge 2

Please explain ______________________________________________________________________________

48. In your opinion, would allowing life subsidiaries of non-life insurance companies full access to sell products in the life 1

third sector have a positive effect, a negative effect, or no effect on your company's ability to compete in the third sector? 

(Check one.)

Very positive effect 0

Generally positive effect 0

No effect 6

Generally negative effect 3

Very negative effect 3

----------------

 No basis to judge 2

Please explain ______________________________________________________________________________

 One non-life company did not respond to this question. 1

Page 48 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
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23

GOVERNMENT CORPORATIONS [Section V]

49. Does your company participate in the insurance programs of the following Public Corporations? (Check all that apply.) 1

The Government Housing Loan Corporation 8

The Pension Welfare Service Public Corporation 5

The Housing and Urban Development Corporation 7

The Okinawa Development Corporation 5

The Employment Promotion Corporation 5

----------------

None of the above ---> Skip to question 51. 7

50. Both before and after the agreement was signed, to what extent, if at all, do you believe the allocation of premium shares

under public corporation insurance programs were being made using fair, transparent, non-discriminatory, and

competitive criteria? [Section V(1)] (Check one box in each column.) 

Extent to which the allocation of premium shares under public corporation 

insurance programs were being made using fair, transparent, non-discriminatory,

 and competitive criteria. . .

 Before the agreement was signed. After the agreement was signed.

To a very great extent 0 To a very great extent 0

To a great extent 1 To a great extent 1

To a moderate extent 0 To a moderate extent 0

To some or little extent 1 To some or little extent 1

To no extent 5 To no extent 6

---------------- ----------------

No basis to judge 1 No basis to judge 0

 No brokers participate in these programs. 1

Page 49 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
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U.S. Insurance Provider Responses to

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24

COMPETITION [Section VI]

51. Both before and after the agreement was signed, to what extent, if at all, do you believe the Government of Japan has

vigorously enforced its antitrust laws in the insurance sector? [Section VI(3)a] (Check one box in each column.) 

Extent to which the Government of Japan vigorously enforced its 

antitrust laws in the insurance sector . . .

 Before the agreement was signed. After the agreement was signed.

To a very great extent 0 To a very great extent 0

To a great extent 0 To a great extent 2

To a moderate extent 0 To a moderate extent 4

To some or little extent 5 To some or little extent 5

To no extent 7 To no extent 2

---------------- ----------------

No basis to judge 2 No basis to judge 2

Not applicable 1 Not applicable 0

52. Both before and after the agreement was signed, to what extent, if at all, do you believe the JFTC has vigorously enforced

the Anti-Monopoly Act (AMA) with respect to trade associations, including self-regulatory organizations (such as the

Life Insurance Association and the Marine and Fire Association)? [Section III(10)b] (Check one box in each

column.) 

Extent to which the JFTC has vigorously enforced

the AMA with respect to trade associations . . .

 Before the agreement was signed. After the agreement was signed.

To a very great extent 0 To a very great extent 1

To a great extent 0 To a great extent 2

To a moderate extent 1 To a moderate extent 6

To some or little extent 5 To some or little extent 4

 To no extent 5 To no extent 0

---------------- ----------------

No basis to judge 3 No basis to judge 2

Not applicable 1 Not applicable 0

Page 50 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
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U.S. Insurance Provider Responses to

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25

53. Since the agreement was signed, do you believe the antitrust enforcement actions taken by the Government of Japan have

had a positive effect, a negative effect, or no effect on your company's ability to compete in Japan? [Section VI(3)a]

(Check one.)

Very positive effect 1

Generally positive effect 2

 No effect 11

Generally negative effect 0

Very negative effect 1

----------------

No basis to judge 0

Please explain your response: _____________________________________________________________

_____________________________________________________________

54. Before the agreement was signed, to what extent, if at all, do you believe Keiretsu practices and case agents limited your

company's ability to compete in the Japanese insurance market? [Section VI(1)a] (Check one box in each row.)

To a very To a To a To some To No

great great moderate or little no basis

extent extent extent extent extent to judge 

Keiretsu practices 6 2 3 0 3 1

Case agents 7 2 1 0 4 1

55. After the agreement was signed, to what extent, if at all, do you believe Keiretsu practices and case agents limit your

company's ability to compete in the Japanese insurance market? [Section VI(1)a] (Check one box in each row.)

To a very To a To a To some To No

great great moderate or little no basis 

extent extent extent extent extent to judge

Keiretsu practices 5 4 3 0 3 0

Case agents 6 4 1 0 4 0

Page 51 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
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U.S. Insurance Provider Responses to

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26

OVERALL IMPACT OF THE AGREEMENT 

56. Overall, do you believe that the U.S.-Japan bilateral agreement on insurance has had a positive effect, a negative effect,

or no effect on your company's ability to compete in the Japanese insurance market? (Check one.)

Very positive effect 0

Generally positive effect 2

No effect 8

Generally negative effect 1

Very negative effect 0

----------------

No basis to judge 0

Too soon to tell 4

Please explain your response: _____________________________________________________________

_____________________________________________________________

Page 52 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
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U.S. Insurance Provider Responses to

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27

PART 2

COMPANY PROFILE QUESTIONS

57. What year did your company become licensed to sell insurance in Japan? - - Range from 1947-1995

58. How is your company organized in Japan? (Check one.)

8 Branch

6 Subsidiary -- wholly-owned

1 Subsidiary -- joint venture ö Please enter the percent owned by your company - - This 1 subsidiary is U.S. 

0 Agency -- sponsored by __________________________________ majority owned

0 Other - Specify: _______________________________________

59. How many tied and/or independent agents does your company use in Japan to sell insurance products? 

 (Enter numbers. If none, enter 0)

Insurance Companies

Tied agents - 4 companies @ 0; 1 company each at 6, 12, 110, 934, 1000, 1469, & 1695.

Independent agents - 2 companies @ 0; 1 company each @ 110, 111, 120, 130, 2310, 5500, 7500, 8766, & 15,698

Brokers

Agents - 1 company each @ 15, 18, 25, 34

Brokers - 4 companies @ 0

60. Other than through agents, what methods does your company use to distribute insurance products in Japan?

(If no other methods are used, enter "None".)

“Direct marketing” (mentioned by 4 insurance companies)

_____________________________________________________________________________

_____________________________________________________________________________

Page 53 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
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U.S. Insurance Provider Responses to

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28

61. Which insurance products does your company offer in Japan? (Check all that apply.) 1

First sector life insurance classes: Second sector non-life insurance classes:

6 Term Life 10 Fire

5 Whole Life 10 Voluntary automobile

1 Pension 9 Compulsory automobile liability

4 Other: Specify: ___________________ 9 Marine and transit

11 Other casualty excluding personal accident 

 3 Other - Specify: ___________________

Third sector life insurance classes: Third sector non-life insurance classes:

7 Hospitalization 11 Personal accident

4 Cancer 2 Nursing care

4 Nursing 9 Overseas travel

3 Other - medical ___________________ 4 Other - Specify: ___________________

0 Other - Specify: ___________________

62. For each class of insurance product, what was the volume of direct and net risk premiums collected in MOF's fiscal 

year 1995 in Japan (provide figures in U.S. dollars).

Note: GAO is not reporting company premiums/revenue data collected for this question.

63. Your company's net risk premiums collected in Japan in your company's fiscal year 1995 accounted for what percent of 2

the following: (provide percentage for both blanks)

% of total company worldwide net risk premiums collected - Range from .2% to 87% 3

% of total company foreign (i.e. non-U.S.) net risk premiums collected - Range from .6% to 99.9% 3

__________________________

 Responses to question 61 include products placed by U.S. brokers currently operating as agents in Japan. 1

 Twelve companies responded to the first part of question 63 and eleven companies responded to the second part of 2

 question 63.

 Brokers collect commissions rather than premiums. 3

Page 54 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
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U.S. Insurance Provider Responses to

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29

COMMENTS

64. If you have any other concerns or comments about any topic covered in this survey, please use the space below. If

necessary, you may add sheets.

_________________________________________________________________________________________

_________________________________________________________________________________________

_________________________________________________________________________________________

_________________________________________________________________________________________

_________________________________________________________________________________________

_________________________________________________________________________________________

_________________________________________________________________________________________

_________________________________________________________________________________________

_________________________________________________________________________________________

_________________________________________________________________________________________

_________________________________________________________________________________________

Thank you for your assistance.

Please fax the completed questionnaire to Christine Broderick at (415)904-2111 or mail it to the following

address:

U.S. General Accounting Office

301 Howard Street, Suite 1200

San Francisco, CA 94105-2252

Attention: Christine Broderick

A return envelope is provided for your convenience but can only be used if you are returning the completed

questionnaire via the U.S. Postal Service.

Page 55 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
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U.S. Insurance Provider Responses to

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(711177) Page 56 GAO/NSIAD/GGD-97-64BR U.S.-Japan Trade
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