Current circumstances and challenges for the internal control system of the Group
In March 2025, our domestic P&C insurance subsidiary received a business improvement order from the Financial Services Agency regarding the leakage of customer information. This is the third business improvement order we have received in less than 18 months, following previous orders concerning insurance premium adjustment practices and fraudulent automobile insurance claims. As Group CRO, I take it very seriously.
SOMPO’s Purpose, “For a future of health, wellbeing and financial protection,” is a compass navigating us to make contributions to society and to enable a sustainable increase in corporate value. To realize this purpose, it is essential that we conduct our business in a highly transparent manner built on a robust management foundation, and the key to achieving this is an effectively functioning internal control system.
Currently, the Group is tackling to break through outdated business models and industry practices and reform its corporate culture. We need to make sure that our progress is steady, so we aim to utilize our new management structure to strengthen collaboration across business and regional boundaries, proactively incorporate diverse values and best practices, and continuously enhance internal controls based on global governance standards.
We also understand it is important that all officers and employees capture the potential gaps between our values based on our business model and society’s values, and that they ensure not to overlook these gaps, but rather take ownership of them, proactively reviewing work processes and ways of thinking to make continuous improvements. We believe this PDCA cycle of assessment and revision is critical to realizing a firm internal control system.
Three key initiatives to strengthen the Group’s management structure
Following the business improvement orders, Sompo Japan Insurance continues to make progress in line with its business improvement plan. However, the issues identified are not unique to our domestic P&C insurance business. They must be addressed by the Group as a whole, and to that end the Group is implementing three key initiatives.
(1) Develop a healthy organizational culture that emphasizes compliance and customer protection
Breaking through outdated industry practices and transforming our corporate culture is highly depending on the behavioral changes in every officer and employee. Last year, we revised our Compliance Code of Conduct and created “SOMPO’s Yes” to serve as a mechanism (decision-making guidelines) that ensures we consistently do the right thing in our day-to-day operations. Closely following these guidelines will be crucial going forward, and Group companies are already implementing their own initiatives. These include publicizing the new guidelines through messages from the CEO and executives, as well as in-house newsletters and training sessions, and by creating mobile phone standby screens and video conference backgrounds highlighting “SOMPO’s Yes.” We have received feedback from employees saying that “SOMPO’s Yes” has steered them in the right direction, suggesting that our efforts to embed these guidelines are gradually delivering results. By sharing examples of effective initiatives undertaken by Group companies, we will continue doing our utmost to foster a customer-oriented culture throughout the Group.
(2) Implement initiatives to establish an effective governance system
In our daily operations, it is crucial to identify hidden risks and address them appropriately instead of being focused solely on achieving targets, through joint efforts by frontline and head-office. When reviewing frontline operations and target-setting, our head office’s second-line team and internal audit team will exercise their oversight and monitoring functions from an independent perspective, with a view to enhancing the effectiveness of internal controls.
As a specific initiative, we will be revisiting operations by incorporating external viewpoints to identify the compliance risks and conduct risks inherent in our daily operations, subsequently conducting a fundamental review of the governance system taking into account the identified risks.
(3) Establish an appropriate legal compliance system
As a key measure for preventing problems from occurring within the Group, it is critical that all officers and employees have a correct understanding of the laws and regulations, and an awareness that certain daily routines may be in violation of them. Sompo Group has introduced the “SOMPO Learning Hub,” a Group-wide learning platform that officers and employees can use to access training at any time. This has contributed to an environment in which employees can systematically acquire knowledge to be applied to day-to-day work. We plan to reinforce our legal knowledge education, focusing on key topics, through practical curriculum, integrating components such as briefing sessions, internal workshops, and self-assessment. We also plan to remain abreast of legal and regulatory trends worldwide so that we can review and enhance systems for ensuring legal compliance without delay.
Our path to transformation
Receiving an additional business improvement order in the midst of implementing our business improvement plans has made us keenly aware that our “status quo bias” is more deeply rooted than we thought, hindering change. We now view this crisis as the “last chance” to transform our corporate culture, and have committed to the aforementioned initiatives in order to regain the trust of stakeholders while also fostering the Group’s growth.
To ensure the implementation and adoption of an effective legal compliance and governance system, it is critical that every officer and employee make the right decisions and take the right actions. Leading by example, our management team will work cohesively with the entire Group to drive corporate culture transformation.
