Tokio Marine Holdings, Inc. (8766) Earnings Call Transcript & Summary

Ladies and gentlemen, it is now time to start. My name is Ishiguro from IR Group, Tokio Marine Holdings. Thank you very much for sparing your time from your busy schedules today to participate. From this fiscal year, we are holding a series of theme briefing sessions entitled, Tokio Marine Insights. And we would like to host these sessions on a regular basis. In this first session of the series, we'd like to talk about digital strategy in light of the COVID-19 crisis. And I'd like to introduce the speakers for today. First of all, we have Mr. Masashi Namatame, Executive Officer and Head of Digital Strategy, Tokio Marine Holdings; and we have Mr. Komei Watanabe, Head of Digital Strategy, Tokio Marine & Nichido Fire Insurance; and we have Mr. Hidenori Kobayashi, Deputy General Manager of Claims Management, Tokio Marine & Nichido Fire Insurance. We'd like to proceed in the following way today. We have a presentation from Mr. Namatame and Mr. Kobayashi using the deck that we have uploaded to the homepage, and then we will want to take your questions. [Operator Instructions] We would like to end at 4:30 today. We are operating this session with the minimum headcount possible or present in this venue, and we have taken thorough measures to prevent infections. But as for the speakers, we are speaking without masks so that we can secure clarity of speech. And we have chosen the attire of no tie, casual wear not necessarily because this is a digital session. Let's hear from Mr. Namatame.

Hello, ladies and gentlemen. Thank you very much for participating today. My name is Namatame. I'm in charge of digital strategy. Thank you very much for your support for the business. And I would like to explain about our digital strategy today. But before we do, I'd like to talk about myself. I'd like to introduce myself. I have joined Tokio Marine Holdings 2 years ago, and I have assumed this post from April this year. Before I came here, I've had a long experience in the investment bank and have been working in Visa on the payment technology and have been in charge of customer relations. And I've also been a director at BlackRock. Let's look at Page 2. First of all, I'd like to introduce the organization as to how our company is going to pursue digital strategy. In one word, we have the global business foundation, which is the strongest strength that we have at our company, and we have the global talent all over the world. And we're going to use this to its maximum to pursue digitalization. Now we have our insurance business within and outside of Japan, and we have been addressing the changes in the society and the economy. And that's how we have grown. As you can see, we have our offices in Tokyo, New York, London, Singapore, São Paulo and various other cities where we can get information from. But digitalization is, well, moving forward at a very fast speed, just because of the society and the economic activities, but also because it is global. It is speedy. And also, it's an enabler that makes the impossible possible, and also creates new businesses and new values. We have been trying to create more innovation by creating a highly sensitive [ rater's ] screen and open this lab in Silicon Valley from 2016 and also have a digital lab in Singapore, London, Tapei and Tokyo, 5 places in the world. And we have a new -- second-generation leader Silicon Valley already, and the members are rotating very well. So on Page 3, we're explaining the meaningfulness of why we're going to pursue digital strategy. And we would like to continue to be trusted as the insurance company and continue to grow. And in order to do that, we would like to continue to improve our business management and make sure that we're a lean organization. And that's why technology would be an enabler for us to do all of these. The basic concept of our strategy has always been mission-driven and the fusion between people and technology and also global digital synergy, and we would like to provide our services broadly to the society going forward. And what it means that the digital will move -- will advance, it means that for everybody's life in daily life, medical, health care, marine, space, even virtual worlds, there are various areas we can contribute and provide new value and create new value for that. So as I just mentioned, the core business, which is the fire and auto businesses, will be the first businesses that we would like to imbue with the latest technology. Kobayashi will explain later that -- here are some cases, but we have the flood damages where we have used satellite and AI image analysis to implement this insurance payment process; and also for auto insurance as well, we have introduced the accident images with AI and have been able to reduce the insurance payment process to its minimum and have been very accurate in the assessment as well. So digitalization of insurance is a global trend, and we have been doing this to our businesses so that we can become more faster and more accurate with the implementation of automation, high-speed and AI. And we would like to make sure that we collect the knowledge and expand that into the other areas of our businesses going forward so that we can have good fruit and good outcome. Our insurance business will function together with the changes in the evolution of the society and the industry, and it's also a business to manage various risks that our customers have as they pursue their activities in the society and the economy. I mentioned earlier that the technology is an enabler, but we need to think about what technology does and what we cannot do with technology and what are the risks, what are the new risks. Simply put, in order for us to continue to grow with sustainability, we need to make sure that we set the right themes for the future and solve them using digital. What's especially important today is written on Page 5. Right now, we have the natural disasters, CASE, MaaS, IoT, which is all progressing; and the super-aging society as well, which are all social challenges that we are facing, not just in Japan but all over the world. We have these social challenges and the customer needs that are born from these challenges. We believe that the source of our competitive edge is to be able to address these issues with our global talents. These changes in the world are very quick, and our themes will have to change in the same pace. Therefore, we would like to be flexible in updating our strategy in our R&D function and labs. There are some specific initiatives that we have here. First of all, if we go into your smartphones, zoom in, you will see some of the products that are concluded within the smartphone. For example, if you need a very -- if you need cash at an emergency situation, this might come to be very helpful, for example, an automatic insurance paying system in sync with the seismic intensity. This is something that is a very first in industry, a parametric type of insurance product. So this is the type of business that precisely we need to conclude in the smartphone. And also, we have one, when we zoom out to the outer space, which is 800 kilometers above us, we have something that we have worked together with Hiroshima University and Axelspace company and also with Hydro Institute, together, to work on the red tide predictions for people -- industries in the aquaculture world. And this is done with AI, and also prediction for the future. This will also help to improve the speed and give us more learnings through the AI. In the area of mobility, we have DAP, which is the strengthened product that we have utilizing the driver quarter. We have the features such as automatic notification to the insurance company and also a diagnosis of safe driving capabilities. And we've invested in WHILL, which is a company that makes electronic wheelchairs, and put -- started to put together a comfortable and safe mobility system, looking at the super-aging society. We've already started demonstrative experiments in the Haneda Airport. And with the collaboration with Aidea, we're using this for hull insurance as well, for accidents for ship. And this is the way we'd like to work on MaaS. The theme MaaS is related to the system design for aging society and also the metropolitan and nonmetropolitan transportation issues. And so we have actually announced a business alliance with Mastek Japan that is a company that establishes MaaS business models and also the Times 24, which is the major company in parking. In the health care industry, we have been providing the Medical Note, the medical information provision function to our customers, and also provide the health application by L&C. On Page 8, we have our initiatives. Some of the cases are on Page 8, but you can see we're working with the Silicon Valley company, Weather Company, overseas and also Tractable from London on the image recognition of accidents using AI technology. From April, we have been working with PKSHA Technology, PKSHA. This is the company that we have actually announced the capital alignment with. They are the -- one of the leaders in data analysis and AI. And so we can use their technology for text recognition, image recognition and voice recognition because their strength is algorithm development and data analysis. We believe that this kind of technology can be used in a very helpful way for various fields. The investment through venture capitals, we have been expanding to, not only in Japan but America and Asian labs as well. And we're expanding this network for the growing partners, our business partners. And to talk about digital, we have to talk about some of the alliances with outside platformers and market holders. We have a comprehensive alignment together with NTT DOCOMO. And we have AI Hoken, the AI insurance product that we have that is utilizing AI features as well. And also Amazon's Alexa, too. We work together with them to provide a system where you can acquire a -- you can obtain an insurance product for a 1-day ride. So these are all very early-stage initiatives, but we would like to continue to talk with various companies in this way. And next, we would like to talk about how we are trying to make our operations more efficient with digital. In the financial earnings briefing sessions, we have already announced that ever since we started our operation transformation project in 2008, we have been working very hard to improve our management operation. And we would like to make sure that we utilize digital technology and make our operation process more efficient so that we can provide even more higher added value. And this digitalization of our business is being accelerated with the COVID-19 situations, and we have a lot of new trials going on internally. Please look at the next page at your leisurely time. And next page, I mentioned that we are going to utilize our global business foundation. So in the world of digital, we have to be digital. It's actually a must condition for us to be able to deploy our strategy. Silicon Valley is the center of overseas R&D functions, and we have the US VB/VC information, and that will help us to work in Tokyo, but also in HCC, Delphi, Philadelphia and also Pure, these companies -- Pure, which we acquired last year, acquired last year. And we'd like to work together with these global companies so that we can develop more products and services. Recently, we moved some members from (sic) [ to ] Silicon Valley, New York and in the East Coast of America. We are strengthening relationships with the VBs and VC networks. The London lab has been established this year in a full-fledged manner, and the Head is Daljitt Barn, the Global Head of the Cyber division. So this is the way we'd like to make sure that we work together with our overseas team members all over the world. And so we would like to put -- gather these talents together within Japan, Asia and the world in a place which we call, digital roundtable. This is where all of the management from all of our group companies would get together to share the information regarding challenges and best practices and the future. In order to move forward in the digital strategy, we need to work on talent as well. Already 2, 3 years ago, we've been pursuing a lot of hiring from outside. I myself am from Visa Inc., and there are various other members coming from Google, global IT companies, IT companies and health care companies, people who have talents from all over the world with various talents. And so these members will become the center, the leader of the digital expansion going forward. Also, we're working together with outside talents. For example, we are working together on what we call DS Hill Climb. This training is supervised by Yutaka Matsuo, the professor from Tokyo University. He's a data scientist, and we're putting this together to provide this kind of information to our employees and to train them. We may open this up to some external participants in the future, making sure that our program is activated even more. At the very end, I would like to talk about the digital in the corona situation. Without -- needless to say, we know that the restrictions on human contact due to COVID has pushed us to change furthermore. And remote work is moving forward very quickly. So what's important is the society will continue to change, people's activities, the industries will change, and we need to be able to set the right themes so that we can provide the functions that are needed. For example, in the health care area, there's a possibility of remote health care services. And also with the advancement of technology, information security also becomes very important. Well, these needs are already recognized. They're realized. But we need to foresee even further to hone our capabilities to see the future and to be able to set the right themes to devise our future services. This is the kind of discussion we're having internally. We look forward to your support going forward. At the very end, I would like to talk about a little innovation that happened 138 years ago. Today, June 25, 1882 in Tokyo, this day is actually the day that a horse-drawn carriage was running on the railway in Tokyo. The distance is just 2 kilometers, and the fare was just JPY 0.02. Well, that's about JPY 1,000 in today's values. And so the horse tram car, they call it, has decided that they're going to draw the carriage on the railway, letting go of the advantage of being able to go wherever they want, but decided to prioritize the comfort. And this is the first day that kicked off, and this can become a very big innovation. I just wanted to give this story to you. And now I would like to pass the baton to Kobayashi in charge of claims service.

Hello, everybody. I'm in charge of digital strategy, and I'd like to now talk about more specifics about the claims service and its digital strategy. So in order to realize this strategy, about 3 years ago, we put together a team fully dedicated to this. And I am the team leader, Kobayashi. Thank you very much for having me today. Before we go into the actual topic, I would like to talk about the premise of this. So first of all, a claims service is a service to pay the insurance to customers who have been affected an accident or a disaster. And it's a very important part, the claims service, of our problem-solving activities. And as a mid- to long-term strategy, we have made this slogan to advance the claim service, "It's not just Kaizen. It's not improvement. It's an evolution of our claims services." We're not going to just digitalize the process that we've had, but we're going to transform the whole definition of how claims service should be as well as its business model. And in order to do that, we would like to utilize digital to its maximum. That's our strategy. Now in the past, quality and efficiency were 2 different efforts, and sometimes, they could be even trading off. But now we would like to transform our customer interface and also transform our business model so that we can pursue both quality and efficiency at the same time. And also, we would like to take our claims service to the next step. Now I'd like to go into the specifics. This is a busy slide. Please excuse us for this. But on this page, we have the 7 basic processes of the claims services. And I'm going to explain each and every one of this later on. First of all, the flow. First line, first notice of loss and initial response, the call that we get from the customers, and then we explain to them what is going to happen. Second line, the loss review and fraud prevention in order to confirm whether we can pay out or not and the actual amount of payment. Third line, progress report and settlement negotiation, the report to the customers as to what is happening so that they can feel assured and also going through settlement negotiation with all the parties related to the accident and then the internal administration because we need that up until payment. And then on line 5, we have projection and prevention and follow-up services. These are related to providing value beyond insurance payment. line 6 is about quality improvement and talent development. And at the very end, we have the wide-area disaster response, which is the collective of all of what I've mentioned so far. So on this page, we have the now and the future. Current is on the left. Future vision is on the right side. And in a nutshell, what we're trying to say is all of these work -- that people are doing right now will be digitalized as much as possible so that we can evolve in this form that we have stipulated on the right side. There are various ways to utilize digital, but there's mainly two ways. First is to transform the customer interface or how we interact with customers. In other words, we would like to exit from using telephones and paper, but making sure that the way we interact with customers is convenient on the customers' part and also efficient for the staff that works for the claims service. The line 1 and line 3 are relevant to what I just mentioned. The second way is to make -- pursue efficiency in our internal administration. And this is related to line 2, 4, 5 and 6. The commonality between two, transforming our customer interface and utilizing AI, the commonality between these two are, this is not just a replacement of people with digital. It's not that simple. We are going to review the roles of people and digital and work on the process once again. We are going to realize the best mix of people and digital in that sense, and ultimately, we would like to maximize the productivity. And with the help of digital, people will be able to focus on what only people can do. So we have more specific detail about the 7 lines, the 7 items that I just explained. First of all, let's look at the left half, please. This is about the first notice of loss and our initial response with the customers, which is all done by phones, basically. But we are going to transform this part using digital, but not everything. Just trying to digitize as much as possible is not the point. We need to give the options and flexibility for the customers to choose the methodology that is the best for them. And if there are any routine work, the customers will be able to conclude them by themselves. And if we are able to improve these customer experience, we will be able to reduce some of the redundancies like the machine answering or the customer having to call again, and that will help us make our operation more efficient as well. Let's look at the right side now. It says loss review and fraud prevention. And this again is about the confirmation of whether we can pay or not and the amount of the money. What's important here is that -- the fact that there is no AI that can completely replace a role of a human being. AI does its job, and people do jobs that only human can do. 3 years ago, when we established this new team, there was an overseas insurance company that was going ahead in this field. So ever since, we have been learning from them, looking at their latest best practices and also looking for partners, screening them and really discerning the technology level and going through P&Cs in a thorough way. But even -- no matter how much we learn from overseas, we can't just import it directly, and we need to make sure that we Japanize it properly to the Japanese environment. Making sure that it fulfills the business conditions with additional development if that is required. And now we are quite proud that even globally, we have a very excellent model that we're about to finish up right here. We've been able to accumulate a lot of knowledge and experience with this. For example, there's an AI model that we have developed internally for fraud detection, and this is the type system that we would like to implement to our front lines. And there are more challenges to make in this area going forward. Let's look at the next page, please. First of all, the left half, so this is about the progress report and the settlement negotiation. And we would like to make sure that we transform our communication with the customers, not just with the phone, but providing illustrative and easy-to-understand explanations on the web screens, even with videos, and also using the chat function so that customers can casually communicate with us. And with this best mix, we would like to provide the options to the customers so that they feel comfortable and also our staff members can operate efficiently. Now please look at the right side. It says internal administration and payment authorization. In the claims service, there are inspection and confirmation work that we need to do, recording and all that. But we would like to use AI and RPA to make this part efficient. Now AI language recognition is something that is very difficult, even globally. And in some parts, it's not going well yet. We've been going through a lot of trials and errors ever since 2015. But we have been able to develop an AI that can solve this problem, too, within this fiscal year. And we would like to roll this out for a field test with our front line soon. Next page, please. So this is an effort to expand the scope where we can provide value with claims service, for example, prevention of accidents, reduction of accidents or mitigation of disasters. What I'm saying is that we would like to invest our resource into domains that are beyond insurance payment. And we would like to highly use our accident data, which is our asset, acquire data, accumulate them, analyze them and utilize them. So in other words, it's a data lake which we are establishing, and we are also training the people that can use this and practice with this. Please look at the right half. Now digital is not just about efficiency. It also helps to nurture talent and improve quality. First of all, we can prevent mistakes and trouble, and of course, troubleshooting and recovery, which is a backward-facing kind of work. This kind of load requires a lot of psychological burden, and this will also be mitigated with AI as well. And it will help quality improvement, too. We will utilize this for talent nurturing, too. We know that today and in the future, our strongest strength is people. And so with our front line, to make sure that on-the-job training is more efficient and more effective, we would like to use AI and data. For example, we have these cases that maybe we can predict whether it is difficult or easy and understand the nature of it and predict that at the moment of the first notice or the first contact. And in that way, we can strategically train our people to be able to handle these cases. And we'd also like to make sure that their operation and their experience is visualized, making sure that people understand the gap between current and in the future. We'll make sure that the data becomes more rich so that people can use it more. Next page, we're talking about natural disasters. And we would like to make sure that we can cater [ to ] this kind of phenomenon because we know that this is becoming more frequent and the magnitude is becoming larger. We'd like to evolve in this area so that we can provide assurance and security to our customers. Especially, this is where digital works well. For example, in the earthquake situation, we know that this creates an extreme spike in our operation when there is a natural disaster. So you can understand that if there's a process that hits the roof and it goes beyond our capacity, then our whole process will break down. Especially the first line of notice and the witnessing of the site and all that has to be done in a self-concluded way by digital. And we would like to make this self-conclusive using digital. We have been introducing systems that enable this up until today, and it has been completed to a certain extent last fiscal year already. And moving forward, we would like to announce this to more customers, and we would like to utilize it to its fullest extent. And we'd like to make sure that we use AI for the check procedures as well using AI, satellites and drones. And with the COVID 19 impact, we'd like to also work on contactless and remote kind of claim services, too. This is the way we would like to not obsess with our conventional methodologies, but utilize digital to its maximum so that we can change natural disaster services to its -- from its root. So I know the time is limited, but I would like to just summarize my presentation as of today. Our strategy is in 2 big buckets: first of all, transforming our contact with the customers and making our operation more efficient and advanced using AI. The first one, customer interface, has been implemented last fiscal year to some extent. From this fiscal year, we would like to utilize it more and make sure that we can run the cycle faster to reflect customers' voices. For the latter, we have been able to finish it up to a certain extent using AI in terms of technology, but we need to go through the field trials going forward in our front lines. I would like to conclude here.

Now we would like to take questions. [Operator Instructions] So please understand in advance that we may not be able to address all of your questions, but we will follow up on them from IR Group. First of all, from JPMorgan Securities, Otsuka-san. We have a question, and this is for Mr. Namatame, I believe. So from your experience working in other companies, what is the strength and the challenges of Tokio Marine Holdings in terms of its digital strategy? Yes, Namatame will answer.

Otsuka-san, thank you very much for your question. So my experience in other companies, from that experience, I would like to talk about the strength and the challenges of Tokio Marine Holdings' digital strategy. I understand your question as above. So I've been working for Visa and BlackRock, mainly in the financial industry and players that are strong in the technology field. It is the payment field. It is the investment -- risk management business. So yes, in these fields, technology is very important, and we need to implement that very quickly. And also, the technology has grown to be able to analyze a large scale of big data, and I've seen that personally through these experiences. And now I come to Tokio Marine Holdings, and I've seen the digitalization of this company these past 2 years. And I understand that the system requirements and the technology that needs to be implemented and also the technology specifications required is different depending on what service we are talking about. But this is exactly what we would like to face squarely and seriously, and we have been working on this in the past 2 years. As I have explained in the very beginning, the basic concept in our digital strategy is very clear. And we have been working on every single project. And when we start these projects, these 3 concepts that I mentioned is always the most important themes. So through these concepts, we would like to continue to serve our customers and the society. And I think the concepts are very clear. The clarity of this concept is the strength of Tokio Marine Holdings. I'd also like to talk about the breadth and the width of the talent that this company has. I've been working in these global companies, and I've been -- correction, I've been visiting many of our group companies overseas, and we have all these members that all say they are committed to the digitalization of our operations. So this is a result of the fact that we have been working to expand our business overseas and have been nurturing insurance business overseas. In the exact same way, we are going to expand our digital strategy, and this deployability is also our strength. Next, moving on to the challenge, to your question. We have these fields, the domains, and an expanding diversity of customers, and so it is a challenge for us to make sure that we set the right priorities. The Holdings' Digital Strategy division is what I'm in charge of, and so I need to make sure that the resources, people, objects and money are prioritized correctly. I always have this at the top of my mind that I need to do this appropriately. And there are all these various challenges that we are trying to tackle, and every time we deal with them, we'd like to make sure that we do meaningful projects and making sure that we set the right themes to devise our products and services in the future. Well, I mentioned that this is my challenge, but it's more like a mission, an ongoing mission that we have to continue to set the right priorities and to set the right themes.

Thank you. Mr. Namatame. Taking the next question from SMBC Nikko, Mr. Muraki, the analyst. Compared to Visa and Mercari, when you pursue the digital strategy in this insurance company, what kind of challenges do you have in mind? Maybe there are some duplications to the first question, but here's another one. Among the management members, they're -- it's probably a difference in the digital literacy and also depending on the subsidiaries of the channels, and the customers are also very diverse as well. So would you be able to roll out one global digital strategy to such a diverse organization of yours? Mr. Namatame?

Yes, Namatame. Thank you very much for your question. So you have 2 questions, and I think I'll answer the second question first. Our business domain is indeed diverse in terms of products and markets and customers. And so will a global digital strategy be meaningful? Now I may be repeating my answer once again, but yes, it is a material challenge that we need to work on, this diversity. But we think it is very meaningful to work on this challenge and overcome it so that we have a digital strategy for every associate in the group. And that's why the division that I lead is called Digital Strategy Group, and we've even changed the name of the organization, the company name. And so with -- we have this organization that we have reformed across all of our organizations within not only Tokio Marine Holdings, but also Tokio Marine & Nichido Fire Insurance. This is how committed we are to transform our organization so that we have the right team, the right organization to pursue a global digital strategy. And to your first question, the digital literacy variances in the management members. It is true that when it comes to digital literacy, there is a variance between not only management but all people in this entity, depending on their perspectives, depending on how they use their skills and the individual's capabilities as well. So yes, there are differences. Now I personally have a background that is not necessarily in engineering, but I just happened to be able to train myself through all of these work that I have experienced before coming to Tokio Marine. And in a sense, I have been blessed. Now we need to do this on an organization level. And in order to do this, we do need to base-up the talent of all members of this company, including management. And this is one of the challenges that I have on my shoulder. Earlier, we talked about the talent management, talent nurturing scheme. And I talked about that Hill Climb, that program that we're going to provide as a training for relatively high-level data scientists. So this is one example of the various trainings that we would like to provide to all members of this organization so that they can deepen their literacy and be able to utilize it in their actual work. And so of the web meeting that we have introduced is also something that is used by many of our management members who acknowledge that web meetings are essential. And they've gone through a very short learning curve, and the literacy level and the awareness is changing very quickly. Also, when it comes to interaction with overseas, going through video is actually very clear. And because of the help of the web meetings with overseas members, we are having a more active discussion and dialogue with overseas members, which is great. So this is something that we've been able to experience in such a short amount of time. And we'd like to take this fruit, this experience, to boost our initiatives going forward.

Thank you. Next, we would like to hear from Mitsubishi UFJ Morgan Stanley, Tsujino-san. From technology cost perspective, I'd like to ask, with the COVID-19 situation, I understand that technology utilization will go up. But what is the implication of the costs? And also, with the COVID-19 situation, the digital cost itself will probably go up in the world. So what kind of impact does this have to you? Can we have Mr. Watanabe answer this one?

Yes. I am Watanabe, and I am in charge -- the Head of Digital Strategy at Tokio Marine & Nichido Fire Insurance. Now related to corona, first of all, when it comes to remote work and contactless work style, this is something that is emerging very quickly with this COVID -- with the emergence of COVID-19 infection. And as Tokio Marine & Nichido Fire Insurance, we've already been working on the context of paperless and utilization of smartphone and also digital contracting agreements with our customers. And these are the tools that we have introduced even before COVID-19. For example, we have e-Zone, e-Choice for -- and also a smartphone app, e-Connect, that allows customers to sign off their agreement. These are some of the establishments that we've -- that have become very helpful through the COVID-19. And also, we have the QR code procedures that have serviced in February this year as well. And these are actually -- were very helpful under the COVID-19 crisis. And furthermore, we've basically had the sales style of visiting customers face to face, but with the shift to remote visiting, we've been able to make our operations actually more efficient with the reduced time from travel. Now in the Digital Strategy division, we're working on various strategies, productivity, efficiency, and I feel that -- the themes that we've been working on felt like they were going to come sometime in the future, but actually, they came immediately because of the COVID-19 situation. So in one go, in a very speedy manner, we believe that digitalization will proceed very quickly. Against the context of remote work, visiting customers, the claims service, corporate and also in the context of paperless, we can automate operation and accelerate e-commerce as well, for example, for providing products and services with digital in a contactless communication way or the hybrid between online and off-line. We will have more and more systems that take on these kind of style and fashion. And this is the way we believe that digitalization will proceed very quickly. But these will -- some of them have already been planned, and some of them will be a new theme for investment going forward. We would like to, in terms of cost, look at the ROI for each and every project carefully as we have done and make our decisions. In terms of the big frame, I think you are probably looking at the operation rate here. So if you talk about that, it's -- as you all know, it's a matter of denominator and numerator. So it's about how much income we have versus cost, which is talent and property and agency fee. So digital is not everything. But I believe that digital will be a very strong key to determine the ratio for Tokio Marine & Nichido Fire Insurance going forward. So we need to work on both the productivity and also the value-added side as well in utilizing digital, so that we can provide the best mix of digital and people, which we have been communicating in our financial earnings briefing session. 30% level in a long-term -- or less than 30% is what we would like to aim for going forward. As a company that is pursuing digital, achieving this numerical goal is something that we would like to do as quickly as possible.

Daiwa Securities, Watanabe-san. Regarding the claims service, in terms of digitalization of insurance payment, you said that -- you talked about the satellite utilization. How much have you've been able to reduce the time lag before and after the satellite introduction? We've had the typhoon last year and the year before. So maybe you can use these examples to talk about how much leeway you have in reducing the time line.

Thank you for your question. So first of all, in terms of the insurance payment, the lead time of that strictly is, first of all, you need to look at whether it is relevant to the payment or not. And then the actual amount of the loss will be determined and then the payment will be locked in. So in the latter half, the process that I mentioned in the latter half, when a disaster happens, we have a peak of a rush, and it's very difficult to shorten that process. So the actual payment itself will be influenced very much with this latter half process. But we can control the part before that, whether it will be relevant to insurance payment or not, whether we give them the green light or not, which gives actually a big sense of assurance to the customers. This is where we would like to utilize the satellites to improve the accuracy. It is not a matter of months, but it will be reduced by a week or 2. Now last fiscal year, we actually, well, introduced this system that has been developed over 2 to 3 years, made more accurate using AI. And actually, there were some -- as a result, there were some areas that we were able to utilize it to its full extent and some areas where we could not really use it well enough. So we'd like to learn from this experience and make sure we can it better this year.

Thank you. Now we have a question from the buy side, Wellington, [ Weidenbach-san ]. So the question is, by improving the customer service, is there an estimate of how the combined ratio will be affected? And will it drive the top line?

I'm Watanabe. Thank you very much [ Weidenbach-san ]. So in terms of improving customer service, what is the growth potential? So in terms of the growth potential, there is the customer's contact point, which is our agency channel, primarily. And first of all, this agency channel -- this world, first of all, will need to be digitalized, so that we can provide the best mix of face to face and digital. So we have the specialized team, the dealer team and the commercial team, various teams, but this is the channel that is the main one, the agency channel. So we would like to utilize digital to pursue the efficiency -- the growth potential of this one. In terms of a new channel, we would like to work together with platformers to come up with new marketing methodologies. We are going to use these economic zones of various platformers to come up with services for a new risk analysis or new ways to sell or new ways to approach the customers based on data analysis. These are some of the themes that we're working on through alliance with platformers. And we're also working to find more platformers, too, to pursue our challenge in more fields. So this is the main answer regarding growth potential. But even before talking about channels, really, the root of our value lies in the products that we develop. And it's very important that we focus on this -- intensifying competition over product development. In terms of digital strategy, we must be able to provide a data-driven product and a data-driven service for senior markets, various targets that we see. And it's really about how creative and how innovative we can be in developing these products for different customers.

Thank you. Citigroup Securities, Niwa-san. This question is for you, Mr. Kobayashi. You said a lean organization is something you'd like to establish. With digital strategy, when you compare your organization to other players in the world, will you be really able to pursue a unique initiative here? And in terms of transformation, you really need to exit the current situation. So that probably will mean that you will have some resistance from your conventional -- from your team, maybe. So if you can talk about how you're going to overcome those resistance.

First of all, regarding the lean organization, what we are doing is to increase productivity, first of all, and furthermore, invest more resources into areas where we can increase value. For example, mitigating the impact of the loss from an accident or a disaster beforehand is something we can do as an added value. And you mentioned transformation. I explained this in my explanation that you can't just throw in an AI and expect the process to transform. It's not that easy. You need to really observe the work style of the frontline staff members and really set the target in a realistic manner. So in the past, it would be -- this kind of initiative would be very much rolled down in a top-down manner, where the headquarter comes up with an idea and that goal is communicated into the lower ranks of the company. But in terms of digital strategy, we cannot take the same approach. This new way of approaching itself is a challenge. And that is, we're going to take information from younger staff members who are actually facing the customers outside of our headquarter and take their insights to devise a new process. This is called digital camp. And we are executing this, for an example. And the actual AI that is devised, we use it for our actual operations. And then we have these promoter members in the frontline, and we give them the role of deploying this technology horizontally. This is a new approach in itself. Do you have anything to add, Mr. Watanabe?

Yes, to your question, when we pursue the transformation, what will become a resistant force? Well, often, when you look at the MBAK study, which Japanese companies do, they always talk about the resistance in the sense of -- in the context of innovation. We are the last company -- we're the oldest company, 140th anniversary, a very traditional insurance company that has been around for a very long time. Yes, we do have some challenges that we need to conquer. And also, we do have the largest market share as of today. So in this current business model, we have a strong foundation for profitability already and a very fortified channel as well. So the biggest point is really to maintain the fortress that we have, the talent and the business and the organization, but pursue digital strategy at the same time. So we would have to mix all of these and go towards the direction we need to go, but be very aggressive with innovation and devise new channels, new products and new sales models, too. And the approach that we're taking is to really try these new projects one by one. This is exactly what I have been appointed to do in this mission of ours. So with these projects, and also utilizing our existing force, we would like to pursue innovation. And we do need to pay attention to the talent side of things as well. Yes, this market is changing very quickly. So we can hire talent from mid-career so that we can supplement talent with very specialized experiences and know-how, including data scientists using the expert training course, and et cetera. So in summary, we're trying to imbue the external talent, the experts from outside of the company and introduce them into our group so that we can mix that together with the strength that we already have. And I'm fighting to get that best combination going forward.

Next, we have a question from Mizuho Securities, Sato-san. We have had opinions that this is destructive to the existing industry, and these auto insurances are also a disruptor to the insurance industry as well. So I imagine that some of these projects that you are working on may be disruptive to yourself. And are you working on projects that can potentially do that to you as well? Mr. Namatame?

Yes, Mr. Sato. Thank you very much for your question. Just like that question from Niwa-san about the digital transformation, I think your question is related as well because it's about the possibility of self-disruption. So I'd like to convey our thoughts and also my personal thoughts as well. So in this world of digital, as I said in the very beginning, what happened here is that it changed the rules of the business. I think that's what it did in a nutshell. For example, with the cycle of 40 years, we thought something will happen, but it happened in 10 years. We thought something will happen in 10 years, but with digital, it happens in 2 years. Or we thought that the Japanese way of playing the game is good, but it became -- the rules became totally global or the customers changed or the market trend changed or the competitors changed. These are the changes that surround us. This business environment that surrounds the company is changing as we speak. So we will have to take in foreign concept and foreign knowledge, which means we need to change as well because we are taking in foreign objects for us to change. We would like to have these progressive approaches, and in this context, obsessing on precedents will not make sense at all. We understand. So it is a clear mission that we figure out how to do this. And also, if there are any resistant forces or resistant matters inside the company, we must be completely dedicated to overcome that and implement this innovation. I'm not -- I've heard about that disruption discussion, but at the same time, I would like to bring together all of the forces of this group company as one team as we go on this quest for a digital strategy. And of course, there may be some differences depending on the function or the organization. But ultimately, we would like to achieve this digitalization as one team. So this is the direction, and this is my sense of mission.

Thank you. Next question. I can see that some of the questions are not related to digital, so I would like to take that later. But now I would like to take the question from Otsuka-san, JPMorgan. So Tokio Marine & Nichido Fire Insurance's differentiation in digital strategy. What is it that you can do that no other can? Maybe I should direct this to Namatame-san. And Watanabe-san, if you need to add something.

Yes, Otsuka-san, thank you again for your question. So compared to our peers, what is the differentiation of Tokio Marine? Well, the efforts that our peer competitors are making, I'm sure that everybody has their own strength, and I'm not sure if we can make a clear comparison in that sense. I think what we should be doing is to put out and establish a clear strategy based on our strength and really pursue that single-mindedly. And when I think about what is our strength, ever since I came to this company and assumed this post, I feel that the business that we do is a type of industry that is widespread to various types of stakeholders. And this might be the same with other competitors as well, but we have various ideas and various customers who we work with and various types of business partners who would like to work together with us. So we would like to use the breadth of our business to help us learn from every stakeholder and make sure that we learn enough that we can bear fruit in a tangible way. And we have a very strong sense of mission that we must do this. Also, we're a company that has grown to become a very global company, and an active dialogue especially when it comes to digital strategy will be helpful. This is not about Japan being -- or Japanese being in the center of the world, trying to come up with an idea for everybody else. We should be utilizing the connection and the relationship and the ideas from foreign countries, foreign members as well, so that we can engage in a new dialogue and new ideas. And that will help us strengthen our strengths even further. And in this way, we would like to make sure that I have tangible results. Mr. Watanabe?

Yes. Digital strategy, how is that different from other companies? Well, I echo what Mr. Namatame mentioned. We do have a big global footprint and this becomes our strength when we look at domestic, international, non-life and life insurance and our group companies businesses, and it helps us to pursue a wide diversity. And this kind of diversity allows us to create various fruit, like chemical reactions going forward. And it is already happening as I speak. We'd like to take all these knowledges from overseas, take that into Japan, put a plan together and spread that out overseas. Maybe in Japan will be -- maybe if there's something difficult to execute in Japan because of the regulations, we can do that outside of Japan. In these ways, having a global synergy becomes very, very effective. I think that is the differentiation from others. Also, in -- I don't know if this is a comparison to others, but when it comes to executing digital strategy, it is often the unfortunate case where the digital promoter kind of organization is just grandstanding and trying to pursue the initiative on its own, almost. But we would like to make sure that all of our organizations are -- become a part of this digital strategy initiative. This is something that we've already started. And pursuing digital strategy in this way in an all organization way will bear good fruit in the future.

So thank you very much for those questions, and now we would like to close this digital strategy briefing session. And for the questions that we were not able to take today from your chat boxes, we would like to announce them -- respond to them later on. At the very end, we would like you to communicate to us in this chat box below about your opinions regarding this session and any theme that you want Tokio Marine Insights to take-up in the future. [Statements in English on this transcript were spoken by an interpreter present on the live call.]