Commission Dispute... Insurance Premium Card Payment at an Impasse

Insurance Company Commissions Drop to 1% Range
Should Not Become Industry Privilege for Card Companies

[Asia Economy Reporter Ki Ha-young] The insurance and credit card industries are showing starkly different positions regarding card payments for insurance premiums, particularly over fees. Both industries emphasize customer convenience and burden reduction, but since the issue is directly linked to profits, it is expected to be difficult to narrow the gap in their stances.

According to the National Assembly audit data on the 'Status of Insurance Premium Card Payments in the Last Five Years,' submitted by the Financial Supervisory Service to Lee Jung-moon, a member of the Democratic Party on the National Assembly's Financial Services Committee, the proportion of insurance premium card payments during this period was only 3.9% for life insurers and 22.7% for non-life insurers.

Among life insurers, only 18 out of 24 companies operated a card payment system. The company with the highest card payment ratio was LINA Life Insurance at 35.1%, followed by AIA Life Insurance (14.6%), Shinhan Life Insurance (12.0%), and KB Life Insurance (10.1%).

In the case of non-life insurers, most of the 17 companies in the industry operate card payment systems. AXA Non-life Insurance had the highest ratio at 81.8%, followed by Hana Non-life Insurance (63.3%) and ACE Non-life Insurance (53.0%). Samsung Fire & Marine Insurance (28.4%), Hyundai Marine & Fire Insurance (26.1%), and DB Insurance (26.9%) also recorded ratios in the mid-20% range.

The issue of card payments for insurance premiums reveals a clear divergence in positions between the insurance and card industries over fees. Currently, insurers are subject to card fees of 1.8% to 2.2%, which are at the level of large merchants. Whether an insurer is a card merchant and the range of products eligible for card payment are autonomously decided through contracts between card companies and insurers.

The insurance industry is concerned that if fee burdens increase, insurers' operating expenses will rise, leading to premium hikes, which would ultimately increase the burden on customers. They argue that card fees need to drop to the 1% range for card payments to be feasible.

On the other hand, the card industry claims that while insurance premium card payments should be expanded for customer convenience, the 2% fee rate is effectively at cost level when considering payment agency fees. Applying lower fee rates only to insurers would also violate fairness with other industries.

Regarding this, Representative Lee stated, "The financial authorities should actively intervene to resolve conflicts such as adjusting insurance card fees." Earlier, on the 14th of last month, Lee proposed a revision to the Insurance Business Act allowing insurance premiums to be paid by credit or debit cards. The bill also includes provisions to punish insurers (up to one year imprisonment or fines up to 10 million won) if they treat credit card-paying customers unfairly.

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