A STUDY OF RISK MANAGEMENT OF JAPANESE
NON-LIFE INSURANCE COMPANIES
Mitsui Sumitomo Insurance Company Limited, Japan
Abstract. In general, Japanese non-life insurance companies carry large
catastrophe risks such as typhoons and earthquakes due to geographical features.
In addition, they also carry large investment risks, one reason for which is that
they are selling long-term insurance contracts such as saving type insurance. In
this paper, I will discuss future subjects of risk management of Japanese non-life
insurance companies, mainly focusing on investment risks.
Key-words: Fair value and fair value based risk, ALM enforcement, Embedded
Currently, international solvency standards are being discussed by International
Association of Insurance Supervisors (IAIS) and International Actuarial Association
[IAA] etc, and International Accounting Standards Board (IASB) is developing
insurance International Financial Reporting standards [IFRS] (Phase2). Japanese
non-life insurance companies have strengthened their risk management and
balance sheet management in the sight of these developments. If the ideas
discussed in insurance IFRS or international solvency standards (especially
concepts of fair value valuation of insurance contracts and measurement of risks
in terms of fair value valuation) are introduced, it may affect Japanese non-life
insurance companies dramatically. So actuaries of non-life insurance in Japan
continue to play great roles in risk management.
In this paper, first I will introduce the developments of insurance IFRS (Phase2)
and international solvency standards, and second explain the features and
circumstances of Japanese non-life insurance business. Finally I will discuss the
present conditions and future subjects of risk management of Japanese non-life
insurance companies including case studies, mainly focusing on investment risks.
2 Developments of Insurance IFRS and solvency