Ruling, Opposition, and Authorities' Comprehensive Regulatory Tightening Increases Pressure on Insurance Industry

Business suspension or registration cancellation for more than 3 administrative sanctions per year
Constitutional right to trial deprived with 'one-sided binding effect'
"Is the insurance industry an anti-consumer group?"

[Asia Economy Reporter Kim Hyo-jin] The political sphere and financial supervisory authorities are increasingly intensifying regulations on the insurance industry. This is interpreted as a result of consumers demanding tighter regulations as business structures rapidly diversify and become more complex. However, some regulations raise concerns that they may infringe on the constitutional rights of insurance companies and significantly impact many industry workers, leading to worries that the measures may be excessive.

According to financial and political sources on the 10th, Kim Seong-won, a member of the People Power Party, introduced a bill to amend the Insurance Business Act earlier this month. The bill stipulates that if an insurance agency or insurance company is subject to administrative sanctions more than three times a year for violations of the Insurance Business Act, they will, in principle, face suspension of business or cancellation of registration.

Kim explained the background of the bill, saying, "It has been found that unhealthy business practices by insurance agencies or insurance companies are repeatedly occurring," and "The aim is to eradicate illegal activities and contribute to maintaining order in the insurance market."

The amendment to the Financial Consumer Protection Act, previously proposed by Lee Yong-woo of the Democratic Party, is also raising tensions within the industry. This amendment reflects the 'one-sided binding force' plan promoted by the Financial Supervisory Service (FSS) centered on the Financial Consumer Protection Division. It stipulates that if a consumer accepts the FSS's dispute mediation proposal in small-value dispute cases, it will have the same effect as a court settlement regardless of the financial company's consent, and the financial company cannot file a lawsuit.

Specifically, the proposal to apply this to cases involving amounts under 20 million KRW is being discussed. About 80% of all financial dispute cases fall under this category, with a significant portion related to insurance. The amendment aims to strengthen consumer rights by preventing financial companies from delaying or filing lawsuits to undermine the effectiveness of dispute mediation.

Financial Services Commission Chairman Also Expresses Concern Over 'Constitutional Rights Infringement'

If the amendment is enacted, financial companies would lose their constitutional 'right to a trial.' Eun Sung-soo, Chairman of the Financial Services Commission, stated during the October parliamentary audit, "While I understand this from the perspective of consumer protection, I also have doubts about whether it is appropriate to deprive constitutionally guaranteed trial rights."

An insurance industry official said, "Since many disputes occur in the insurance field, appropriate and proper regulation could actually benefit insurance companies," but added, "However, the recent trend seems to view insurance companies or the industry as 'anti-consumer groups,' which is regrettable."

Despite the Financial Supervisory Service's strong moves to sanction insurance companies, industry attention is focused on these developments. Through comprehensive inspections resumed last year, the FSS imposed severe penalties on two out of three insurance-related cases under disciplinary procedures. Samsung Life, the industry leader, and Hanwha Life, ranked second, received institutional warnings for underpaying cancer hospitalization benefits at convalescent hospitals to cancer insurance subscribers and for providing free interior services during the relocation of Hanwha Galleria Duty-Free Shop to the headquarters in the 63 Building, respectively.

Kyobo Life, ranked third and currently undergoing a comprehensive inspection, is also on high alert due to these stringent measures. Since the revival of the FSS comprehensive inspections, the market has anticipated that large insurance companies would face retaliatory and intense scrutiny.

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