Despite 'Gwanpia' and 'Jeongpia' Controversies... High Expectations in the Insurance Industry

Saeng, Sonbo Association President and Insurance Development Institute Director Both Former Bureaucrats and Politicians

[Image source=Yonhap News]

[Asia Economy Reporter Oh Hyung-gil] As the year-end personnel procedures for heads of financial-related institutions conclude, controversies over 'Gwanpia (bureaucrat + mafia)' and 'Jeongpia (politician + mafia)' have resurfaced in the insurance industry.

Critics argue that key positions have been occupied by individuals who are neither financial bureaucrats nor heavyweight politicians, calling it "dividing the spoils" and "parachuting." However, some voices welcome the emergence of institution heads with strong connections and influence in government and the National Assembly.

According to the insurance industry on the 25th, recently, Jeong Hee-soo, former head of the Korea Insurance Development Institute, was appointed as the new chairman of the Life Insurance Association; Jeong Ji-won, former chairman of the Korea Exchange, as chairman of the General Insurance Association; and Min Byung-doo, former National Assembly Political Affairs Committee chairman, as head of the Korea Insurance Development Institute.

Former Committee Chairman Min is a three-term lawmaker from the Democratic Party of Korea, having served in the 17th, 19th, and 20th National Assemblies.

Chairman Jeong of the Life Insurance Association is also a three-term lawmaker and served as vice chairman of the Advisory Committee for the Integrated Government Promotion Committee in the Moon Jae-in presidential campaign in 2017.

Chairman Jeong of the General Insurance Association passed the 27th Administrative Examination and held positions such as director of the Banking Supervision Division at the Financial Supervisory Commission, director of the Financial Services Bureau at the Financial Services Commission, president of Korea Securities Finance Corporation, and later served as chairman of the Korea Exchange.

"To Restore Financial Publicness, Administrative Finance Must End"

Bureaucrats must undergo screening by the Ministry of Personnel Management when re-employed by related institutions within three years after retirement. However, the screening process is considered formalistic, and there have been ongoing criticisms about its limitations in preventing Gwanpia.

Civic groups have criticized that although these individuals have been recognized for their expertise and abilities in political and economic fields, their actual experience in the insurance sector is minimal.

The Financial Justice Solidarity stated, "To restore the public nature of the financial sector, administrative finance must be stopped, and private experts should be elected as chairpersons instead of Gwanpia." They added, "Unfair deals where Gwanpia secure positions in the financial sector in exchange for lobbying activities for the government, acting as problem solvers, must be immediately halted to protect financial consumers."

There are also arguments that given the challenging issues facing the insurance industry, individuals with expertise are necessary. Starting next March, the Financial Consumer Protection Act will be enforced, allowing punitive fines to be imposed on insurance companies, corporate agencies (GA), and agents.

In July, employment insurance will become mandatory for special employment types, including insurance agents. There are concerns about mass layoffs, especially among low-efficiency agents. Additionally, in 2023, the introduction of the new International Financial Reporting Standard (IFRS17) will bring new changes to the financial soundness management of all insurance companies.

Criticism arises questioning whether bureaucrats or politicians lacking expertise can fulfill their roles effectively. Accusations of "parachuting" and blatantly occupying key financial sector positions are also raised.

However, the insurance industry holds the view that there is no reason to reject capable bureaucrats. They expect these leaders to act as buffers against the influence of financial authorities as much as possible.

In the past, bureaucrat-led institution heads have made significant contributions to resolving issues. Former General Insurance Association Chairman Kim Yong-duk utilized his international finance experience to help form the 'IFRS Global Consultative Group' to delay the introduction of IFRS17, and he was recognized for voicing concerns to financial authorities regarding automobile insurance premium hikes amid rising loss ratios affecting the profitability of general insurers.

An executive from an insurance company said, "It was an unexpected appointment," but added, "It clearly reflects the current reality of the insurance industry, which cannot escape administrative control."

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