Insurance General Agencies (GA) Face Consecutive Severe Disciplinary Actions... GA "Shocked"

Severe Disciplinary Action for Cancellation of Tae Wang Partners Registration

[Asia Economy Reporter Oh Hyung-gil] Tae Wang Partners, an insurance corporate agency (GA) notorious for incomplete sales, has been severely punished by financial authorities. It was revealed that dozens of planners disrupted the order of recruitment activities, leading to the cancellation of their registration. The GA industry has been shocked as severe sanctions have been imposed one after another on GAs with inadequate insurance consumer management.

According to financial authorities on the 22nd, the Financial Supervisory Service recently imposed a registration cancellation and a fine of 200 million KRW on GA Tae Wang Partners for violating the Insurance Business Act by engaging in prohibited acts related to the conclusion and solicitation of insurance contracts. Additionally, three executives were recommended for dismissal, and 95 insurance planners were notified of business suspension ranging from 30 to 180 days along with fines.

This sanction was unusually severe among recent penalties against GAs because multiple violations of prohibited solicitation acts and prohibited special benefit provisions were found.

From 2018 to 2019, 54 planners affiliated with Tae Wang Partners processed 3,913 insurance contracts they had solicited as if they were solicited by other planners, receiving recruitment commissions amounting to 3.066 billion KRW. Four planners deceived by processing 223 insurance contracts they had solicited as if they were solicited by planners belonging to other insurance agencies, receiving commissions of 100 million KRW.

Tae Wang Partners also paid recruitment commissions of 1.459 billion KRW to 63 individuals who either did not have insurance solicitation qualifications or were not affiliated planners. Under the current Insurance Business Act, commissions cannot be paid to agencies or planners without a consignment contract.

Furthermore, 33 planners affiliated with Tae Wang Partners provided special benefits amounting to 1.726 billion KRW by paying premiums on behalf of approximately 1,760 insurance contract holders for 4,366 contracts.

In this process, planners from other GAs who received recruitment commissions by processing insurance contracts they had solicited as if they were solicited by planners affiliated with Tae Wang Partners were also subjected to business suspension and fines.

Tae Wang Partners was found to have engaged in large-scale disorderly conduct in insurance solicitation during the comprehensive inspection by the Financial Supervisory Service in 2019, and severe sanctions had been anticipated. However, the GA industry was shocked by the decision of registration cancellation, which is effectively an expulsion. This comes amid a series of severe sanctions against GAs recently.

In January, the Financial Supervisory Service imposed a fine of 100 million KRW on the large GA Rich & Co for violating the Insurance Business Act by having insurance planners sign on behalf of contract holders without obtaining their handwritten signatures when concluding insurance contracts.

Also, in July last year, Leaders Financial Sales, considered a large GA, was severely sanctioned with a fine of 3.1 billion KRW and a 60-day business suspension. After the severe sanction, Leaders Financial Sales effectively exited the market by selling some business units to Shinhan Life’s sales subsidiary.

Management and supervision of GAs are expected to be further strengthened in the future. The Financial Supervisory Service and the Life & Non-life Insurance Associations are reviewing measures to control GA operations through the ‘Sales Channel Advancement Task Force.’ Especially with the Financial Consumer Protection Act coming into effect next month, penalties for incomplete sales will be strengthened, raising concerns that GA operations will be further constrained.

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