"Don't Be Misled by SNS Offshore Insurance Subscription Offers"…FSS Issues Consumer Alert

[Asia Economy Reporter Kim Hyo-jin] The Financial Supervisory Service (FSS) issued a consumer alert (caution) on "offshore insurance subscription" on the 24th.

This measure was taken in consideration of the increasing demand for high-yield investment destinations due to the low-interest rate trend, and the frequent cases of encouraging consumers through SNS and other channels to subscribe to insurance products of foreign insurance companies by emphasizing profitability.

Offshore insurance refers to insurance contracted with foreign insurance companies that have not obtained insurance business licenses in Korea.

In principle, entering into insurance contracts with foreign insurance companies is prohibited. Only certain insurance contracts, such as life insurance, are allowed, and even in permitted cases, contracts can only be made via mail, telephone, facsimile, or computer communication. Subscription through solicitors is not allowed.

However, recently, when searching the internet for terms like "offshore insurance" or "Hong Kong insurance," posts encouraging subscription to foreign insurance company products can be easily found.

An FSS official stated, "If a foreign insurance company intends to advertise insurance products, it must report the advertisement content in advance to the Financial Supervisory Service Commissioner, but no such reports have been made so far."

The advertisements collected so far did not include information that the contract protection system under the Insurance Business Act does not apply.

There were many cases where prohibited content was included, such as misleading the contract holder or mentioning future profit dividends.

Examples include statements like "6-7% annual compound interest participating insurance" or "total premium paid 100 million KRW, total withdrawal amount 4 billion KRW."

Considerations such as the possibility of unexpected losses due to exchange rate fluctuations were also not provided.

In particular, since the terms and policies are written in English and there is insufficient information about the specific product details, if consumers subscribe to offshore insurance relying solely on the information provided by the solicitors, the FSS pointed out that consumers are highly likely to suffer unexpected losses.

Offshore insurance is not covered by domestic deposit protection and is not subject to complaints or dispute mediation by the FSS.

An FSS official said, "We will take necessary measures such as deleting related posts and content regarding illegal solicitation of offshore insurance, and in cooperation with the Life Insurance Association and the General Insurance Association, we will thoroughly prevent consumer damage through continuous monitoring of offshore insurance sales using SNS."

This content was produced with the assistance of AI translation services.