Addressing three issues for the Board
Last year’s report identified three issues for the Board of Directors: to revitalize communications (especially horizontal communication); to rebuild the system of internal controls; and to support the executive
transformation. We have focused on each of these issues over the past year.
First, in terms of energizing communications, one change at Board level has been the style of engagement by Group CEO Mr. Okumura in his presentations to Board meetings I have chaired, creating a flat relationship with other directors. At the same time, we receive a detailed news update from him at the start of each meeting. Receiving this wealth of detail with commentary in a timely manner about things that cannot be seen from outside SOMPO has given the outside directors including myself a much deeper understanding, and this has made subsequent discussions more meaningful. Aside from board meetings, we also get information from a range of sources, including intensive discussions between the executive officers and outside directors at retreats; discussions with other outside directors, before and after Board meetings; and discussions with the outside directors of Sompo Japan Insurance, a core Group company. In 2025, we are scheduled to participate in events such as the Leaders’ Summit for the Group’s executive officers, held in July, and the Annual General Meeting for Independent Directors at Sompo International, which we have attended since 2024. I believe these initiatives will help us to gather information and invigorate discussions at Board meetings.
On the second issue of enhancement of internal controls, to strengthen the Group’s third line of defense, in FY2024 we established a new Senior Executive Vice President in charge of Compliance, as well as an outside director for Sompo Japan Insurance. In addition, in FY2025 we named Sompo International Chief Audit Executive (CAE) David Camputo as Group CAE to oversee internal auditing of the entire Sompo Group. The use of overseas thinking in building an internal controls system is quite a rare initiative for a Japanese company, in my view. This is part of the Center of Excellence initiative to ensure the best people are appointed to appropriate positions in the Group, whose effectiveness the Board will keep monitoring.
On the third point of supporting the executive transformation, our response has been based on raising the quantity and quality of related communications with Mr. Okumura and the other executive officers. We held intensive discussions about the new management system at a retreat in December 2024. The shift to a group operating entirely to global standards through the transformation of the management structure rather than merely treating the overseas business as a business segment, represents a significant challenge for the Japanese financial industry. I sensed the firm resolve of Mr. Okumura when we listened to
him talk about the move. The Board of Directors is supportive of this structural reform of management, which one could characterize as ‘thinking outside the box.’
Aims of new management structure
Besides how the business operates, the new management structure is aimed at changing the way people work and the culture of the organization. Since its inception in the Meiji era, Japan’s P&C insurance industry has pursued a unique path featuring wars, various types of regulation, and periods of rapid economic growth. The industry started to assume more global risk after statutory liberalization in 1996, but, as in the banking industry, where I also have experience, I think that the P&C insurance sector has been held back by the so-called “convoy” approach keeping all players at the same speed. In my opinion, we must urgently break free from this old structure. The new management structure confirms Mr. Okumura’s resolve to drive fundamental cultural reform.
The Board’s role in overseeing cultural reforms is to monitor closely whether frontline staff change the way they think and act. We want to spend time confirming consistent change across the Group, rather than observing the details. To this end, we aim to learn what is happening by attending and listening at the meetings of Sompo Japan Insurance branch managers, for example. Changing a corporate culture takes time, and my honest opinion is that we have a considerable way to go.
The key to reform lies in individual professionalism
I believe professionalism is the key to reform. Insurance was born out of the spirit of “mutual aid,” the notion of assisting each other to overcome incomprehensible risks. This same spirit connects to the nursing care business of the Sompo Group today. Every Group employee needs to think and act with professionalism so we can realize the concept of mutual aid. While it is important for professionals to have skills and knowledge, a dedicated sense of mission is at its core.
Humans are said to be one of the most social species. I think it is fair to say human happiness springs from the satisfaction felt in helping others. At its root is a sense of responsibility and the notion of always doing something for customers and the betterment of society. I believe we must re-examine what we are here to do, where we came from, and then reaffirm our purpose. Rather than accepting the company’s purpose as a formality, I would like employees to think about what they want to do for society and the skills they should hone to do that. Inside a company, we tend to think within the confines of our work, but our dedication should be focused not on the company, but rather on customers and society. I believe that professionalism is about doing what is best for customers and society. I want to monitor if employees rediscover their purpose, and then consciously monitor if their actions are based on that.
Sompo Group outlook and role of Board of Directors
Our challenge today is how to accelerate business and culture reforms that would normally take an organization a decade to absorb. Mr. Okumura and the business CEOs of the two business units will be focused on integrating distinctive cultures and getting the business divisions to work and grow together. At SOMPO P&C, the issue is how to integrate regional operations with varied cultures and business methods. At SOMPO Wellbeing, the issue is how to generate synergies between life insurance, nursing care and healthcare – three businesses with a shared concept based around seeking to live happily while being healthy. I hope senior management will demonstrate leadership in how they listen to feedback from each division. The Board will seek to contribute to the sustained growth of the Group by communicating more closely with executives and supporting the implementation of reform measures.
