Our efforts to respond to “Focal points in relation to further enhancement of Compliance and Risk Management Readiness in Captive Agency Channel” 

“The Focal points” (extracted from the materials issued by LIAJ)

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 Principle ① The management stance and its leading roles

• The management delivers a message titled “Taking the Right Course of Action” to all employees and speaks to them directly at Townhall and other meetings.

Principle ② Managers’ roles in the sales organizatio

• Managers of territory, branch and sales offices take a key role in compliance education and PA training at each responsible office to penetrate the importance of compliance in the entire sales force. HO’s staff in charge of compliance is deployed to territory offices or other offices to oversee and work together as a liaison with HO (the management).

Principle ③ Efforts to foster better corporate culture

• We describe “PA Principles” with the rules and standard that PA are expected to live up to in the “PlanRight Advisor Passport” they carry at all times. They present them to customers in solicitation and make our sales philosophy well understood.

• We conduct the Pulse Survey regularly to check how “corporate culture transformation” spearheaded by the management has progressed. Then, we take necessary measures to address issues based on the results.
  

Principle ④ Build “a management structure with three line of defenses”^*2

• We urge the sales organization to enhance compliance efforts in a self-directive way as the risk owner. We have established Compliance & Risk Management Readiness composed of Compliance Dept. and Risk Management Dept. which are in charge of managing, monitoring and coaching sales organization, and Internal Audit Dept. which is responsible for making objective assessments and providing recommendations to them.

• Manulife is a company with nominating committee, etc. The Board of Directors’ Meeting including external board members ensures to improve the internal control system. While Audit Committee monitors the internal control system to see if it works sufficiently or not, aiming to enhance corporate governance.
  

*2 Risk Management Readiness comprises operation departments such as the sales organization (the 1st line), Compliance Dept. and Risk Management Dept. (the 2nd line) which keep sales organization in check and support them, and Internal Audit Dept. (the 3rd line) which is in charge of auditing to see if the 1st and the 2nd line of defenses are functioning effectively or not. We also have the 1.5th line of defense in between the 1st line and the 2nd line of defenses.

“The Focal points” (extracted from the materials issued by LIAJ)

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 Principle ⑤ Compliance and Risk Assessment

• Compliance Committee is responsible for a company-wide compliance risk assessment. Compliance Dept. confirms and discusses measures to address issues based on the results, and report to the Board Meeting.
• PA’s risk assessment is performed on an individual basis. In case that inadequate activities and questionable financial troubles are confirmed, monitoring is performed for such high risk PA from multiple angles. In addition, we step up management of high risk PA’s activities while implementing individual case management by asking the respective policyholders directly. 

“The Focal points” (extracted from the materials issued by LIAJ)

We take concrete measures to control Compliance and Risk Management from a viewpoint of customer protection. For example, the responsible manager and/or supervisor confirm customers’ intention to buy a new policy if they have a record of repeated lapse and cancellation or experience of a big loss at the time of SP policy cancellation. Starting last year, we ask a family member to sit down with an elderly customer at the solicitation table and sign the letter of consent, and also impose a strict solicitation restriction based on owned financial asset. Furthermore, PA are banned to receive cash to reduce the possibility of engaging in serious misconducts such as a fraud and appropriation. We step up efforts to improve compliance training, and strengthen compliance and risk control.

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 Principle ⑥ Clarify operation rules

• We set up the operation rules in “Insurance Sales Compliance Manual” and others to prevent misconducts which conflict with Insurance Business Act and the authorities’ guideline. We also perform monitoring extensively and check with customers to read a sign of PA’s inadequate solicitation activities.

• We have banned PA from receiving cash and reduced opportunities of leading to illicit behaviors. We include information calling for attention in our official website and a letter sent to customers, saying that “Manulife employees never accept cash”. 

Principle ⑦ Education and training

• We conduct compliance training based on actual complaints and past incidents from a viewpoint of customer protection. We identify PA who have insufficient knowledge and understanding as risk employees. Their responsible manager or supervisor checks customers to see if solicitation activities are done appropriately or not.

Principle ⑧ HR and Reward (Award)

• “Pledge to Customers Point” is introduced to PlanRight Advisor Award to assess how customer-oriented they are. PA who fail to meet the criteria are ruled out for awards. A compliance assessment ranks branches and reveals the results monthly. Branches which rank high in the compliance assessment are awarded. Visualizing the status of compliance assessment item achievements would further cultivate a mindset of not only managers and supervisors but each one of PA, and help them behave better in the field.

• We reflect Compliance and Risk Management related items more than before in assessing managers/supervisors and solicitors. We have a systematic assessment in place to reflect not only their own performance but managerial responsibility for PA under their supervision in their pay and benefits.

Principle ⑨ Sales staff activity management

• Branch/sales office managers and branch staff grasp and manage how and what each PA does in the field. HQ Compliance staff who are deployed to a territory office or other manage high risk PA activities.

“The Focal points” (extracted from the materials issued by LIAJ)

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 Principle ⑩ Compliance and Risk Monitoring

• We have a system in place to restrict policies and policyholders with concern over inappropriateness from new business solicitation. Managers or supervisors check risky PA’s solicitation activities fully by calling or vising customers and confirm policies handled by them. Branch staff make a call to policyholders to check policies handled by online solicitation.

Principle ⑪ Respond to a sign of a misconduct (predictor)

• In case that a branch/sales office identifies inappropriate cases (including predictors), they report to the 1.5th and the 2nd line’s Compliance Dept. immediately as it unifies the management of cases of concern. The 1.5th and the 2nd line of defenses work closely to investigate causes of concern and take preventive measures. As just described, we have developed a structure to prevent inadequate cases in advance.

“The Focal points” (extracted from the materials issued by LIAJ)

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 Principle ⑫　Communication within the sales organization

• As part of a branch/sales office audit, we conduct a PA questionnaire. HO’s departments concerned, the 1.5th and the 2nd line of defenses give the respective manager/supervisor instructions and coaching based on the results.

Principle ⑬　Company-wide communication

• The management-led Townhall is held quarterly to discuss a wide variety of topics. BDM holds Townhall every month. To create an environment which ensures smooth communication, we ask our people to submit questions in advance and fill in a post-meeting questionnaire. We share the questionnaire results with the management and those in managerial roles. They make a good use of feedback information in running day-to-day business.

• We also conduct the Engagement Survey for internal staff regularly to understand how well communication between boss and subordinates takes place. We feedback the results to the department concerned.
  

Principle ⑭ External communication

• We set up Call Center and the point of contact in the official website for customers to make inquiry. We examine complaints voiced by customers and NPS (Net Promoter Score)^*3 which customers are asked to respond upon completion of each procedure. We make a good use of them to improve the quality of our daily operation and deal with any inappropriate cases.
  

Principle ⑮ Whistle-blowing system

• The management encourages all employees to leverage the Whistle-blowing service proactively. We have four reporting channels in place which are Compliance Promotion Dept., HR Dept., HO in Canada and the external hotline service. We publicly announce that “each and all channels enforce it rigorously by ensuring the anonymity is guaranteed completely and a person who blows a whistle is protected from any retaliation thoroughly. Thorough and fair investigations are proceeded upon report”.
  

*3 We ask customers to evaluate PA’s job and express opinions following the completion of each procedure to improve our daily operation.

“The Focal points” (extracted from the materials issued by LIAJ)