Collaboration with Development Bank of Japan (DBJ)

Sompo Japan works with the Development Bank of Japan (DBJ) to support the disaster risk reduction measures of corporate clients.
This comprehensive financial service draws upon both the DBJ’s accurate rating capabilities and non-life insurance and risk management expertise. Sompo Japan offers an insurance service that covers loss of earnings and expenses in the event of operational suspension due to a natural disaster. Companies evaluated by the DBJ as having a high Business Continuity Management (BCM) rating, so called DBJ BCM rating, can receive 20% discount at a maximum on their insurance premium. Sompo Risk Management provides assistance service to DBJ clients who wish to bolster disaster risk countermeasures in their business continuity planning (BCP). We will continue to provide total financial solution services by exploring further opportunities for high-synergy collaboration projects with external partners.

Volcanic Eruption Derivative and Related Estimating Method

Sompo Japan and Sompo Risk Management have developed the industry’s first kind of weather derivative, “Mt. Fuji Eruption Derivative,” along with a method for estimating the probability of a future eruption. The derivative indexes eruption-related information such as eruption warnings issued by the Japan Meteorological Agency, enabling business people to prepare for potential losses and costs in the event of an eruption.
Since the derivative promptly pays out a predetermined amount, it can be used by companies as working capital, and is also effective as a business continuity planning (BCP) strategy. The eruption probability estimation method developed by Sompo Risk Management takes the time lapse after an eruption into account and calculates probability based on related global research into the probabilistic forecasting of volcanic eruptions.

Risk Assessment and Consulting Services for Natural Disasters

With large-scale natural hazards such as earthquakes, blizzards, and localized rainstorms growing more destructive in recent years, the need for disaster preparedness and resilience strategies is greater than ever. In Japan, spurred by the devastating March 2011 earthquake and tsunami, a law for national resilience was enacted in December 2013 that requires the national government, local governments, and businesses to cooperate on the development of a national infrastructural and socioeconomic system designed to improve the country’s strength and resilience to natural disasters.
Sompo Risk Management, drawing on its time-tested expertise in risk quantification and disaster preparedness consulting, provides customers with case-specific evaluation of potential damages from such events as earthquakes, tsunamis, volcanic eruptions, and storms, along with specific strategies for dealing with them.
These services cover both hard and soft strategies: Proprietary model-based risk quantification; evaluation of seismic resistance and soil liquefaction potential for buildings and facilities; support for minimizing the impacts of operational downtime through business continuity planning (BCP); and assistance with constructing a business continuity management system (ISO 22301).
In August 2015, the company also began offering a service that provides customers with easy access to risk-related information in map and list formats. The new service centrally manages and continually updates information from various sources, including hazard maps and the large quantity of damage prediction data released by national and local governments. The company is also actively supporting local government efforts to improve their disaster resilience.

Collaborative Research on Sophisticating the Evaluation of Long-Period Ground Motion Risks

Sompo Risk Management aims to provide new insurance services and risk consulting services as countermeasures against earthquake risks, one of the major types of natural disaster, and has been researching and developing ways to evaluate such risks in Japan and throughout the world.

As part of the efforts, they conducted collaborative research with the National Research Institute for Earth Science and Disaster Resilience and Kobori Research Complex Inc., aiming to improve the accuracy of long-period ground motion^*1 risk evaluations. Long-period ground motion has attracted attention as the cause of damage to high-rise buildings and large-scale structures in plains and basins far from the epicenter, such as ceiling boards collapsing in skyscrapers in Osaka City during the Tohoku-Pacific Ocean Earthquake in 2011. Similar damage to high-rise buildings concentrated in the Kanto, Nobi, and Osaka plains is likely to occur in the event of Nankai Trough or Sagami Trough earthquakes, and in fiscal year 2007 the Japanese government started investigation and research of long-period ground motion.

This research was mainly focused on sophisticating monetary risk evaluations of relevant damage to high-rise buildings, based on long-period ground motion generation and propagation simulations by the National Research Institute for Earth Science and Disaster Resilience and high-rise building response analysis by Kobori Research Complex.

Going forward, they will use the results of this research to develop insurance and derivative products and enhance risk consulting services, including business continuity planning (BCP), contributing to the creation of their customers’ risk management systems.

1. Seismic ground motion with a period longer than around 2 second

Results of analysis of energy spectrum (Vᴇ) distribution and velocity response spectrum (SV)
distribution, indicators of long-period ground motion (Sagami Trough Earthquake)

Support for Corporate and Municipal BCP and Disaster Preparedness

Seven years have passed since 2011 earthquake and tsunami, and companies are starting to review their Business Continuity Plans (BCP) or implementing disaster drills.To meet those customers’ needs, Sompo Risk Management started the project taegetting at each company’s problem and made programs of study and training for the new person in charge of BCP in 2017.
Also,Sompo Risk Management has been continuously providing the support programs to further improve their Business Continuity Management Systems (BCMS), especially focused on raising awareness of top management, training employees responsible for risk management and building integrated network of departments and offices. Furthermore, they provide comprehensive consultations for establishing and improving the BCMS, as well as the support for ISO 22301 certification.
Local governments are undertaking various measures including strengthening disaster risk reduction and crisis management in order to prepare for outbreak of infection disease such as a new strain of influenza, storm and flood damage, huge and inland earthquake and tsunami such as the 2011 earthquake and tsunami. They also promote measures for effective management of evacuation centers, support for vulnerable citizens, medical and rescue services at a disaster.
Sompo Risk Management supports local governments to build resilient communities in various ways: Helping renewals of the Local Disaster Management Plans and establishment of BCPs; developing measurements for stranded survivors and related training; making documents on disaster response and lessons learned, and planning and researching for the Urban Renaissance Safety Security Plans in which local governments, corporations and citizens’ organizations work together.

Risk Management for Global Business Operations

There are increasing number of Japanese companies who start to consider the business expansion in other countries given the severe price battle and shrink of the Japanese market due to the falling birth rate. It is expected that Japanese companies will further expand their businesses to not only Europe, emerging countries in Asia including China and ASEAN countries, but also Latin America and Africa.
Sompo Risk Management has started to provide risk consulting service for business in other countries from November 2013. That includes research on local security, risk and compliance training for local staff, and support service for development of risk management system that includes assessment of local offices’ risks to support the risk management activities of the Japanese companies that expand their businesses to the world. Sompo Risk Management strives to meet customer needs by providing comprehensive service menus for risk management for global business operations that cover the accidents as well as daily risk management.

Addressing Cyberattacks

Along with changes to the social environment, such as the launch of Japan’s national identification number system for individuals, amendments to the Act on the Protection of Personal Information, and increased sophistication of cyberattacks, there are growing concerns about information security risks, and various efforts are being made by businesses to strengthen their defenses against cyberattacks.

Our Group supports such efforts through the provision of insurance products and services.

Cyber Insurance

Businesses play a key role in the economy, and in order to support their cybersecurity measures, Sompo Japan offers Cyber Insurance with expanded coverage for the cost of investigating the causes of leaks as well as lost profits, caused by digital data corruption, information leaks, and disconnection of network. In the event of an information leak or other incident, it is crucial to minimize losses, so urgent responses are increasingly important: Rapid investigation of the source and causes, and efforts to control the extent of losses. They have tied up with specialized businesses that provide this kind of support, and offer services to support smooth business recovery for all Cyber Insurance policy holders.

Optimized One-Stop Services Against Cyberattacks

With changes in the social and technical environment, such as the spread of automated driving technologies and the Internet of Things (IoT), and the emergence of increasingly sophisticated cyberattacks, the nature of risks facing businesses has changed dramatically, and cyber security has become a major management issue. If customer information or confidential information leaks, businesses would not only suffer financial losses, but the damage to their corporate brand and loss of customer confidence would also be immense.

Furthermore, if a company accidentally acts as a springboard for cyberattacks on its business partners, the company could lose credibility as a partner even when they do not incur any damage themselves.

Sompo Risk Management provides a multifaceted and optimized one-stop service tailor-made to the needs of our customers using risk management know-how based on our experience in addressing management risks and our robust ecosystem complete with world-class advanced technical capabilities.

One-stop service covering all fields

First in Industry to Launch Fire Insurance for Smart Houses

In August 2018, Sompo Japan became the first insurer to launch a fire insurance policy for smart houses, designed to promote the next generation energy saving housing, including smart houses and ZEH^* (Net Zero Energy House).

As IT technology evolves, efforts have been made to promote energy saving housing in recent years, exemplified by smart houses and ZEH^*, that controls energy consumption and reduces the burden on the environment.

Energy saving housing includes features such as energy generation from solar PV systems and interconnectivity of IoT devices and equipment, notably smart home appliances. As the social environment changes, however, new threats have emerged—there have been incidences in Japan of cyberattacks that target housing equipped with IoT devices.

Given this situation, we developed a fire insurance policy for individuals that covers costs resulting from cyber risks and the loss of revenue from the sale of electric power due to accidental damage to sola PV systems, in order to protect the security, health, and wellbeing of our customers and to encourage next generation housing that is both comfortable and energy saving.

• Housing that aims to achieve net zero primary energy consumption per year by achieving major energy savings and introducing renewable energy while maintaining indoor environmental quality.

Development of a Comprehensive Hazard Map Service Using the Latest Digital Technology

Sompo Japan has developed unique hazard maps, the Sumai no Hazard Map, by combining its insurance payment data with the hazard maps issued by public institutions. We started providing these maps at agencies nationwide in April 2018.

1. Aims and concept

• In recent years, Japan has been increasingly prone to natural disasters, such as earthquakes and typhoons, and disaster awareness among customers is increasing. Based on this trend, we have developed a unique comprehensive hazard map service that uses the latest digital technology to visualize natural disaster risks, including the probability of an earthquake, the estimated depth of inundation from flooding, and areas liable to landslides.
• This service is an information tool that staff at our agencies explain to customers when proposing new policies or renewal of fire and earthquake insurance. The service aims to encourage customers to correctly understand the risks of natural disasters in their own communities and to further convince them of the need for the insurance policy.

2. Service outline

(1) Main functions and features

• GIS (Geographic Information System) is a technology that comprehensively organizes, processes, and visually displays location data (spatial data) based on geographical location to facilitate sophisticated analysis and quick judgments.

Rider to Fully Compensate for Buildings and Household Belongings Destroyed or Washed Away in Earthquakes, Eruptions, and Tsunami

In April 2019, Sompo Japan launched the sale^* at its agencies throughout Japan of an earthquake and other hazards surcharge rider that fully covers buildings and household belongings destroyed or washed away in earthquakes, eruptions, and tsunami.

• We first started selling this rider in October 2015 at a limited number of agencies.

1. Background

• The earthquake insurance provided jointly by the Japanese government and insurance companies compensates only for up to 50% of the fire insurance proceeds.
• When the 2011 earthquake and tsunami occurred, double loans, one for the home that was lost and one for the home that was rebuilt, became a social issue. Rebuilding a home and repurchasing household property requires far more capital than the insurance proceeds from earthquake insurance. After the 2011 disaster, many of our customers expressed a desire for an insurance product to cover the portion not covered by household earthquake insurance.
• We developed this rider in response to such requests.

2.Service outline

• By combining with the proceeds from the earthquake insurance, the rider can compensate for up to 100% of the fire insurance proceeds (replacement costs).
• The rider can be set with our package fire insurance for individuals or package insurance for apartment buildings. We are the first insurer to offer compensation that can cover package insurance for apartment buildings (common areas of condominium buildings).

Launch of Free Disaster-related Services to Partners in China

Sompo China, one of our group companies, is the first insurer in China to start providing the following disaster-related services free of charge to its business partners.

Paper Drill Services to Enhance Effectiveness of Business Continuity Plans (BCPs)

As globalization advances, companies have expanded their supply chains to foreign markets. In line with this trend, companies are now expected to formulate scenarios in disasters that could strike their facilities outside Japan and to ensure the effectiveness of those scenarios.

Many companies have set up key sites in China due to factors such as the country’s large market. Meanwhile, China presents numerous risks that differ from those in Japan, including abrupt legislative changes, IT infrastructure vulnerabilities, and the possibility of unexpected natural disasters and explosions. Accordingly, there has been a growing need for companies to formulate China-specific scenarios and to enhance the effectiveness of those scenarios.

Against this backdrop, Sompo China has started to provide paper drills, free of charge, to its business partners in order to help them prevent disruption to their critical operations during disasters, and to help them minimize damage and rapidly restore operations in the event of a disruption.

●Service outline

Target: Sompo China business partners (all industries)
Service: Predictive paper drill service

1. Schematic training assuming fire and explosion risks
2. Graphic training assuming the risk of logistics accidents
3. Graphic training assuming environmental legal compliance risks
4. Schematic training assuming the risk of the spread of new infectious diseases
5. Graphic training assuming information security and cyber risk

• Other scenarios will be added according to needs.
  Supported languages: Chinese, Japanese, English

VR Disaster Drill Service

Sompo China has partnered with NK Hatsuta (Shanghai) International Trading, a group company of the major Japanese firefighting equipment company, Hatsuta Seisakusho, to provide a disaster drill service using VR technology to its business partners, free of charge, from April 2019.

●Service outline

Target: Sompo China business partners (all industries)
Service: Virtual disaster drill service
The service uses VR to simulate a fire in a factory, warehouse or skyscraper and offers a virtual reality experience for company employees to evacuate from the disaster area. This virtual reality drill enables participants to experience the tense atmosphere when a fire breaks out and to understand the importance of disaster drills and first response drills for when a disaster occurs that comply with Chinese laws and regulations.
Supported languages: Japanese, Chinese, English

Sompo China will continue to contribute to the security, health, and wellbeing of customers by providing products and services of the highest quality possible.