This is not as simple as looking at your operations and moving away from paper and moving to digital. This is really not about the technology. The technology is in place. This is about partnering with third-party distribution partners, everything from Japan Post and Dai-Ichi to our associate channel to banks to move them towards more digital adoption through campaigns and programs that increase that adoption. You have to realize this is not an Aflac issue. This is quite literally no different than what the rest of the financial service industry is trying to do. And so when we talk about moving from 10% to 40% of claims or 50% to 80% of applications, that’s not just an Aflac issue to handle, it is attempting to move forward and beyond the rest of the industry that is plagued by paper.
You don’t realize this, but many insurance companies in Japan quite literally never went remote in their operating platforms because they couldn’t during COVID. They had to keep bringing their people back in because they were tied to paper and processing. That was not our situation. We were able to go to 50% remote, but even 50% remote was a bit high — a bit low, if you will, high in terms of bringing people in. So, there’s a real need to do this, and it’s transformative. So anytime you use the word transformation on distribution and transformation on operations, it’s very important for somebody like me and my capacity to be here on the ground spending time in Japan.
Dan Amos: This is Dan. I want to make a comment is that actually, I wanted Fred to go in 2020. And of all things, as you know, that was the year he got promoted to Chief Operating Officer and then COVID. So the year really is behind because I just thought — it was actually his idea to stay there. My idea was to go there and live three months. And so that just shows how committed he is to the Company and doing well, and at the same time, working with the U.S. So I’m very pleased with Fred being over there. And that knowledge you cannot buy. It takes being over there, either the way I’ve been going for 40 — over 40 years of the Fred’s doing in the last seven. So thank you, Fred, and… David?
Operator: The next question comes from Suneet Kamath of Jefferies. Please go ahead.
Suneet Kamath: On the Japan sales, can you give a sense of how much of those sales represent to the lapse and reissue — and when we think about the sales metric that you show in your supplement, is that a sort of a gross number? Or is that a net number when we think about policies that may be lapsing?
Fred Crawford: When you look at sales, it’s a gross number. So it includes the sale of policies to new customers or customers without the policies and replacement policies. At the same time, a replacement policy also counts towards lapsation. So in other words, yes, it counts as a sale on a gross basis, but also a replacement policy is considered a lapsed policy as well. So you end up having higher lapse rates and higher sales when you have replacement activity. That’s why, in fact, you see our amortization expense pop up in the fourth quarter when we launch a new cancer product or a new medical product because you effectively have a greater level of lapsation. But there’s nothing wrong with a replacement policy. It’s really nothing more than going out to a customer and saying, you may benefit from an upgraded structure of benefits and pricing and other additive writers, et cetera., and there’s nothing wrong with that.
