Tokio Marine Insights "Digital Strategy" Summary of Q&A

Described below is the summary of Q&A session with institutional investors and securities analysts at Tokio Marine Insights "Digital Strategy" held on June 25, 2020.

Q1I understand Mr. Namatame has business experience at another company with strength in technology. Please explain the strength or challenges regarding Tokio Marine’s digital strategy compared to such others.

Tokio Marine aims to contribute to resolving social issues and customer’s issues by providing better products and services based on three clear concepts, and this, by and of itself, is our strength. Digitalization is merely a means. We will clarify the purpose of digitalization, that is, what it will be used for, and create the best mix of our people’s ability and digital to achieve the purpose. Depth of talent and strong commitment by Group companies are also significant strength. As we have diverse areas of prospective business and customers, prioritizing allocation of personnel, goods, and financial resources is a complex issue. We would like to achieve the reform with speed by continuing to utilize the expertise and wisdom of the Group companies on a global basis.

Q2Can a group-wide digital strategy work, despite the gap in digital literacy among the management, and the significant variety of customers, products, and channels among the subsidiaries?

As we engage in a wide range of businesses on a global basis, implementing a cross-entity strategy under the theme of digitalization will be a substantial test for us, but we believe significant results can be achieved if we succeed. With this conviction, we have implemented organizational reform from April, and enhanced group- and global-based efforts. Fueled with the expertise, wisdom, and strong commitment by domestic and overseas Group companies, we will tackle reform with speed. With respect to digital literacy, it is true that the level differs not only among the management, but also among the wider group of officers and employees depending on the individual experience and the area of work. We will improve digital literacy using online meeting and other measures and leveraging on the experiences and lessons learned from the coronavirus pandemic, and will actively engage in developing digitalization experts with Data Science Hill Climb.

Q3Digitalization has accelerated with the coronavirus pandemic; What are lessons learned? Also, investing in digitalization will involve increased costs. Would this affect your business?

Tokio Marine had been implementing business model and work-style reforms including paperless business, remote work, and digital policy sales before the coronavirus pandemic, and these efforts have proved particularly useful during the pandemic. For example, QR Smartphone released in February 2020 realized user-friendly policy purchase procedure using smartphones, and remote work has led to reduced commuting time and enhanced support for the front line by dedicated department. We will take the pandemic as a business opportunity, and sufficiently utilize the experiences gained from the pandemic to further accelerate the business model and work-style reform. Costs are scrutinized and managed for each project from growth potential and productivity perspectives. Expense ratio depends on the top line trend and other factors, and not everything is determined by digitalization. However, as digitalization is key to our cost structure reform, we would like to continue to promote the best mix of our people’s ability and digital from growth and productivity perspectives, and eventually drive the expense ratio below 30%.

Q4How much time will the utilization of satellites save, between the occurrence of the accident and insurance payment? Could you explain using a natural catastrophe case as an example?

Claims services process can be broken down to (1) on-site assessment (insurance payment approval) and (2) determination of loss by scrutinizing the quote by the repairer and payment of insurance. Time required for the second process will depend on how busy the repairer is after the typhoon, but the time required for the first process can be shortened by utilizing satellites and other measures. In particular, we are aiming to shorten the period from about two weeks to several days. Satellites are being used from Typhoon Hagibis in 2019, and we are planning to make improvements for further utilization within this fiscal year.

Q5Please provide examples of top line growth through enhanced customer service.

The key for growth of existing agent channel lies in the combination of strength in their direct business and digitalization. We would like to accelerate growth by enhancing digital access with tools such as Mobile Agent (customer app) and QR Smartphone (smartphone-based contract procedure), and by building a new agent system using a package by Salesforce, which is deemed to be the best CRM available in the world. In terms of new channel development, we are promoting creation of a new digital sales model by leveraging on economic blocs of platformers and market holders. We will focus on development of new products and services with clear targets.

Q6In aiming at a lean management, will there be unique efforts to surpass global peers?

We are promoting an effort to reinvest resources created by improved efficiency into areas with higher added value (for example, providing services beyond insurance payment, such as reduction of damages from accidents and catastrophes). Mindset reform is also crucial for work-style and business model reform with digitalization. Previously, measures prepared at the headquarters were communicated to the front line, but we changed our approach for digitalization. We gathered young employees who are actually engaged in customer service across Japan to share and discuss the future of claims services, directionality of the digital strategy, and how digitalization can be built into practical business. Ideas generated by this group are laterally deployed, promoted by the younger members.

Q7What is the internal obstacle for promoting digital reform? And what efforts are being made to overcome the obstacle?

Tokio Marine is the oldest traditional insurance company in Japan with largest domestic market share, supported by robust profit base and sales channels. As Japanese corporations are sited in relation to the dilemma of innovation, we also have challenges. The key is to maintain our strength and overcome the challenges. Our mission will be to develop and build new products, services, and sales models, and generate innovation in a speedy manner by incorporating external cultures, including through recruitment of expert resources.

Q8Do you have concepts and ideas on self-disruption?

It’s no exaggeration to say that digitalization has changed the rules of business, such as through expediting the cycle of realizing targets; making Japanese-style business operation obsolete; and changing the actions of the customers, market, and peers. In the era of such extreme volatility, we must also change to continue to contribute to the society and support our customers. Being a traditional company, we may find some aspects of the change more difficult, and efforts to change ourselves and perseverance to promote reform will be necessary. All Group company employees will share the same sense of purpose, and promote speedy digitalization by assembling the global knowledge and wisdom.

Q9Is there a digital strategy unique to Tokio Marine Group, and how is it superior to the peers?

Comparison with peers is difficult, but there have been many inquiries to collaborate with us, and we believe there is real value in this fact. As we are engaged in wide range of businesses on a global basis, we are better positioned to assemble cross-entity wisdom to create chemical reaction throughout the Group. We have competitive edge in incorporating diverse ideas, information, networks, and connections through active discussions on a global level, implementing them, and creating global digital synergies.

These information materials are prepared based on the currently available information for us and described subject to our predictions and forecasts carried out at the time of preparation.
It must be noted that what is described therein does not guarantee our future business performance and carries certain risk of misjudgment or uncertainty.
Accordingly, you are kindly requested to bear in mind that there may be a possibility of sizable divergence between the actual business performance in the future and that of our predictions or forecasts described therein.