"Is the Insurance Industry an Anti-Consumer Group? Growing Concerns Over Comprehensive Crackdown (Summary)"

Business Suspension or Registration Cancellation for More Than 3 Administrative Sanctions per Year
Unilateral Binding Effect Depriving Constitutional Right to Trial
Despite Unconstitutionality Risk, Passport and Regulatory Authorities Proceed Simultaneously

[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 stricter 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 business suspension or registration cancellation.

Kim explained the background of the bill, saying, "It has been found that unhealthy business practices by insurance agencies or companies are repeatedly occurring, raising the need to increase the severity of penalties for repeated violations. 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 heightening industry tensions. 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 for small dispute cases, if consumers accept the FSS's dispute mediation proposal, 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 into this category, with a significant portion related to insurance. The amendment aims to protect consumers' rights more robustly 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 National Assembly audit last October, "While I understand it from the consumer protection perspective, I also have doubts about whether it is right 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 the comprehensive inspections resumed last year, the FSS imposed severe penalties on two out of three insurance-related cases under disciplinary procedures. The industry leader Samsung Life Insurance and second-ranked Hanwha Life Insurance received institutional warnings for underpaying cancer hospitalization fees at nursing hospitals to cancer insurance subscribers and for providing free interior services during the relocation of Hanwha Galleria Duty-Free Shop to the headquarters building, 63 Building, respectively.

Amid such stringent measures, Kyobo Life Insurance, ranked third and currently undergoing a comprehensive inspection, is also on high alert. Since the revival of the FSS comprehensive inspections, the market has anticipated that large insurance companies would face retaliatory, high-intensity inspections.

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