January 30, 2009 Customer Service Innovation Project (Business Improvement Plan) Progress Report Nippon Life (President: Kunie Okamoto) today submitted to the Japanese Financial Services Agency ( FSA ) a progress report for its Business Improvement Plan, which started from August 1, 2008. Nippon Life has implemented a Business Improvement Plan ( Customer Service Innovation Project ) in line with a Business Improvement Order dated July 26, 2006 based on Article 132, paragraph 1 of the Insurance Business Law. Nippon Life also implemented measures to prevent recurrence of insufficient payment of claims and benefits in a report dated February 1, 2007 based on Article 128, paragraph 1 of Insurance Business Law, and integrated those measures into its Business Improvement Plan. Nippon Life has been making efforts in its Business Improvement Plan to comprehensively improve governance, payment administration and solicitation management. We take the subsequent Business Improvement Order on July 3, 2008 with the utmost seriousness. Along with continuing and strengthening measures thus far, we will include improving verification of effectiveness in our Business Improvement Plan and reconstituting our plan into improvement and reinforcement of governance system, improvement and reinforcement of internal audit system, and necessary review and improvement of measures to prevent recurrence of insufficient claim payment as a response to the Business Improvement Order on July 3, 2008, and are working to further entrench and bolster our measures with strong determination. Regarding improvement and reinforcement of governance system, by strengthening the function of the Board of Directors, in addition to regularly confirming the progress of the Business Improvement Plan, we verify the effectiveness of the measures and review it periodically, as a series of business improvement cycles, together with monitoring by our Operations Oversight Committee, which is an independent body. This will enable us to establish a more extensive business improvement cycle. Regarding improvement and reinforcement of internal audit system, we are upgrading and strengthening the system and function of our Auditing Department. The Auditing Department is confirming the implementation of preventative measures that were formulated based on analysis of reasons for occurrence of insufficient claim and benefit 1 Nippon Life Insurance Company
payments, and verifying the effectiveness qualitatively and quantitatively. Regarding necessary review and improvement of measures to prevent recurrence of insufficient claim payment, we have taken various preventative measures against insufficient payments. Among those measures, regarding the items that are possible to verify at present, departments excluding the Auditing Department are verifying effectiveness qualitatively through the viewpoint of personnel involved on a practical basis, as well as quantitatively through data. Furthermore, Recurrence Prevention Measure Verification Team within our Auditing Department, which is independent from all other departments, confirms the implementation status, and conducts comprehensive verification qualitatively and quantitatively. As a result, we can see the positive effect of prevention measures for all items possible to verify at present. We will continue and bolster preventative measures, such as expanding sales of Comprehensive Medical Rider that simplifies payment assessment through coordination of surgical coverage with public medical insurance system, and promoting Policy Details Confirmation Activities by explaining to customers about policy details and claim/benefit payment requests, and monitor the effectiveness of those measures. We will steadily advance unfinished preventative measures, such as introducing New Integrated System that drastically rebuild the fundamental system for all areas and processes of customer service from insurance proposals/applications until receipt of claim/benefit. To gain the true trust of customers, our management team will take initiative to steadily carry out our Customer Service Innovation Project, and improve and implement a precise strategy on a timely basis that always considers the customer perspective. The main content of measures for our Customer Service Innovation Project is as follows. 1. Improvement and reinforcement of governance system 1Improvement of effectiveness verification by Board of Directors Our management team is unified in taking initiative to prevent insufficient claim and benefit payments. To confirm the improvement of the payment management, the Board of Directors regularly discusses progress of Policy Details Confirmation Activities and sales of Comprehensive Medical Rider, thereby improving verification of the effectiveness of preventative measures. (since August 2008) 2 Nippon Life Insurance Company
2Improvement of discussions by the Risk Management Committee Regarding the Risk Management Specialist Committee, which is an advisory body of the Risk Management Committee, we increased meeting frequency from twice a year to quarterly, to discuss analysis of reasons for occurrence of insufficient payment and preventative measures. Also, we determined that the Risk Management Specialist Committee shall report to the Risk Management Committee twice per year, to verify details of preventative measure effectiveness and to make evaluations toward formulation of highly effective preventative measures. Our Risk Management Division statistically verifies trends and reasons for occurrence of insufficient payment, and the Board of Directors shall discuss the results of the verification twice a year. (since July 2008) 2.Improvement and reinforcement of internal audit system 1Reinforcement of verification of implementation status and effectiveness of recurrence prevention measures Establishment of Recurrence Prevention Measure Verification Team We established a Recurrence Prevention Measure Verification Team within our Auditing Department, which verifies the implementation status and effectiveness of measures to prevent recurrence of insufficient claim/benefit payments. Also, by having the members of the Auditing Office also serve as members of the Recurrence Prevention Measure Verification Team, our auditors can confirm how the Team functions are being carried out. (since August 2008) Reinforcement of selected inspection of payment assessments We added more personnel to our Claims Examination Management Office to increase rate of inspections on existence of insufficient payment/guidance, and are prioritizing verification of this. (since August 2008) 3 Nippon Life Insurance Company
3.Necessary review and improvement of measure to prevent recurrence of insufficient claim payment 1Release of Comprehensive Medical Rider For hospitalization and surgery costs, we will combine the complex six medical rider coverage into one rider a Comprehensive Medical Rider that provides wide-ranging coverage for hospitalization and surgery costs, as well as necessary hospital visit cost before and after that hospitalization and surgery. The Comprehensive Medical Rider will widely introduce guidelines such as setting surgery coverage scope according to the public medical insurance system, and simplifying the determination of surgery benefit multiplier for facilitating the understanding of customers and sales representatives, as well as preventing insufficient payment in the assessment procedure. We established a system to enable switching the existing medical related riders in their overall coverage to Comprehensive Medical Rider. Not only new customers, but also customers already enrolled in medical riders are eligible to enroll in the Comprehensive Medical Rider. (since October 2008) As of the end of December 2008, we have seen support of this product by many customers, with about 740,000 policies signed. 2Advance of large-scale system development (Introduction of New Integrated System ) We are constructing a radical preventative measure through introduction of our New Integrated System, by maintaining and unifying customer data, introducing business process management, promoting visualization of administration, and also by building a system base that provides products that are easy for customers to understand and minimize the occurrence of insufficient payment. (scheduled for fiscal 2011) Construction of a customer database that can manage unified computer assisted name identification We are proceeding with upgrade of measures for response to customers by constructing a customer database that can manage unified computer assisted 4 Nippon Life Insurance Company
name identification, gathering customer data, from the standpoint of various possible customers such as policyholders, insured, beneficiaries, and designated representatives. Currently, we are proceeding with data accumulation and maintenance for the database. In the future, we will use that data to provide guidance to customers on requesting payment. On our official website, we are introducing a mechanism that enables each customer to register his or her own data. (since October 2008) 3 Ongoing implementation and improvement of Policy Detail Confirmation Activities For our Policy Details Confirmation Activities since August 2007, as of the end of July 2008 we have completed visits to about 7,900,000 customers. Including direct mailing to customers who do not want to be visited, we have contacted all our customers. From August 2008, through review of explanation materials, we will further improve the content of explanations for requesting claim and benefit payments. In fiscal year 2008, we visited about 5,310,000 customers and explained coverage details. (as of the end of December 2008) In our Customer Satisfaction Survey (*) dated November 2008, among customers that answered I received a visit and explanation through the Policy Detail Confirmation Activities, 91.8% were satisfied, which shows praise by customers. (*)The Customer Satisfaction Survey is a questionnaire that asks customers for their evaluation and opinion regarding our products, administration and services. 4Reinforcement of underwriting education To bolster our payment assessment capability, we are strengthening underwriter education by implementing the underwriting education system within the company-wide education system, and improving underwriter training. 1,096 of our employees passed the Life Insurance Payment Specialist examination held by the Life Insurance Association of Japan in October 2008, increasing our cumulative total employees with that qualification to 1,548. 5 Nippon Life Insurance Company