COLUMBUS, Ga., April 13 /PRNewswire-FirstCall/ -- Aflac Japan announced today that it has reported its findings of an internal review of paid claims to Japan's Financial Services Agency (FSA). The company conducted the review of its claims payment practices over the past five years in compliance with an industrywide order issued by the FSA on February 1, 2007. Commenting on the results of the claims review, Aflac Japan President and Chief Operating Officer Akitoshi Kan said: "We have always worked very hard to ensure we pay our customers accurately and promptly. Unfortunately, in the process of this claims review, we found some cases in which we made mistakes and did not fully pay the claims that our policyholders were entitled to receive. We sincerely apologize to those customers who were affected by this oversight, as well as to all other relevant parties. "We have been contacting customers, offering our apology, and paying the additional benefits. We have already completed this process for approximately 80% of all those who deserve additional payments, and we are working hard to contact the remaining customers so we can finish making the additional payments as quickly as possible. In addition, we are taking thorough preventive measures to make sure these mistakes do not happen again. As a company, we will do our best to regain the trust and confidence of our customers." 1. Findings of the review Aflac Japan analyzed all paid claims for a five-year period from April 2001 through March 2006 to determine if there was a need to make additional payments, including cases where customers may have qualified for benefits for which they did not file a claim. The company reviewed a total of approximately 4.23 million benefit payments to 1.52 million claimants. As a result of the review, the company found a total of 19,169 errors, or .45% of total benefit payments made over the last five years. The total amount of the additional payment for these claims is approximately �1.9 billion. Of that amount, �1.0 billion was provided for in the 2006 financial statements of Aflac Incorporated and Subsidiaries. As part of Aflac Japan's day-to-day payment operations, the company has had a process in place for notifying customers of any other benefits they may have been qualified to receive for which they did not actually file a claim. However, in the process of the claims review, the company found 621 claimants who may qualify for additional benefits. For this group of claimants, Aflac Japan will be contacting them promptly to determine if additional benefit payments are required. The company expects to complete this process by May 31. Number of Claims Requiring Additional Payment Ratio of Total Underpaid Underpaid Underpaid Underpaid Total Total Benefits Fiscal Death Health Other Underpaid Benefits to Total Year Benefits Benefits Benefits Benefits Paid Benefits Paid 2001 4 2,747 25 2,776 675,744 0.41 % 2002 16 3,295 22 3,333 751,736 0.44 % 2003 28 4,776 32 4,836 850,370 0.57 % 2004 29 4,795 38 4,862 929,507 0.52 % 2005 21 3,293 48 3,362 1,026,020 0.33 % Total 98 18,906 165 19,169 4,233,377 0.45 % 2. Causes of payment errors The primary cause for these mistakes was human error in the course of claims payment operations, including mistakes in data entry and overlooking of some items on the medical certificate and claim application forms. The company believes its employees' knowledge and skills did not keep pace with the increasing number of claims that occurred and the advances in medical treatments. Errors also arose because of employees' unfamiliarity with a new claims payment IT system that was implemented in 2003 to respond to an increasing number of claims payments. In addition, the company determined it had insufficient procedures to identify human error prior to making a claims payment. However, as Aflac Japan strengthened data entry verification procedures and as employee skills improved due to education and training, the company experienced a significant decline in the error rate in fiscal year 2005, as indicated in the table above. 3. Preventive measures Aflac Japan has been taking measures on an ongoing basis to increase the quality of its claims payment operations, including increasing the accuracy of payments by deploying new systems, appropriately allocating human resources and implementing training programs. Based on an analysis of the causes of the claims processing errors referenced above, the company will use the following measures to help prevent these types of claims errors from recurring. 1) Strengthen education and training programs regarding claims payments Aflac Japan is forming a dedicated team in charge of education and training within the Claims Department. This team will be responsible for conducting systematic training programs that include developing a wider range of more advanced and necessary claims payment knowledge and skills. The company will also implement special training programs that are designed to educate employees on up-to-date medical treatments and information based on input from physicians. 2) Increase the number of employees in the Claims Department Aflac Japan will increase the number of employees in the Claims Department from 450 to 550 over the next three years in addition to further strengthening the verification process for data entry operations. 3) Modify the format of medical certificates Aflac Japan has modified its medical certificate to make it easier for physicians to complete and for employees to read. Changes to the certificate are expected to help ensure that information, such as the name of a surgery, will be entered in the correct column. 4) Strengthen review functions Aflac Japan is establishing a Payment Review Section within the Claims Department to assess and monitor claims payment processes by using the verification system that was developed to conduct the recently completed claims review. An audit mechanism, called the Payment Audit Group, was also established within the Internal Audit Department. This group is staffed with employees who have significant claims payment experience. 5) Centralize data entry operations Aflac Japan will establish a data entry center that will combine seven locations around Japan into one centralized location. This should help to further improve employees' skills on a consistent basis. 6) Establish a Customer Payment Inquiry Section and advisory panel Aflac Japan has established a Customer Payment Inquiry Section. This new section is separate from the Claims Department and provides an exclusive avenue for customers to discuss and/or confirm claims payments. In addition, the company will form an advisory panel to check payment practices and independently review any complaints and/or requests from customers about their payments. For more than 50 years, Aflac products have given policyholders the opportunity to direct cash where it is needed most when a life-interrupting medical event causes financial challenges. Aflac is the number one provider of guaranteed-renewable insurance in the United States and the number one insurance company in terms of individual insurance policies in force in Japan. Our insurance products provide protection to more than 40 million people worldwide. Aflac has been included in Fortune magazine's listing of America's Most Admired Companies for seven consecutive years and in Fortune magazine's list of the 100 Best Companies to Work For in America for nine consecutive years. Aflac has also been recognized three times by both Fortune magazine's listing of the Top 50 Employers for Minorities and Working Mother magazine's listing of the 100 Best Companies for Working Mothers. Aflac Incorporated is a Fortune 500 company listed on the New York Stock Exchange under the symbol AFL. To find out more about Aflac, visit aflac.com. (Logo: http://www.newscom.com/cgi-bin/prnh/20041202/CLTH019LOGO ) Analyst and investor contact - Kenneth S. Janke Jr., 800.235.2667 - option 3, FAX: 706.324.6330, or Media contact - Laura Kane, 706.596.3493, FAX: 706.320.2288, or http://www.newscom.com/cgi-bin/prnh/20041202/CLTH019LOGO http://photoarchive.ap.org/ DATASOURCE: Aflac CONTACT: Analysts and investors, Kenneth S. Janke Jr., +1-800-235-2667, option 3, fax, +1-706-324-6330, , or Media, Laura Kane, +1-706-596-3493, fax, +1-706-320-2288, Web site: http://www.aflac.com/

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