Comparison and Disclosure Expansion of Insurance Company Litigation Status... Short-Term Small Amount Insurance Period Set to 1 Year

Notice of Proposed Amendments to the "Insurance Business Supervision Regulations"
Strengthening Soundness of the Insurance Industry and Consumer Protection

[Asia Economy Reporter Kwangho Lee] The government plans to expand the scope of disclosure regarding insurance companies' litigation status to include the holding of a Litigation Management Committee that reviews whether to file lawsuits and the results of such reviews, in order to prevent abuse of lawsuits by insurance companies against minors and economically vulnerable groups. Additionally, the insurance period for small-amount short-term insurance has been set to one year.

The Financial Services Commission announced on the 11th that it aims to implement these changes within the first half of this year by revising the "Insurance Business Supervision Regulations."

First, the comparison and disclosure of insurance companies' litigation status will be expanded. To prevent abuse of lawsuits by insurance companies against minors and vulnerable groups, the comparison and disclosure content will be expanded to include the holding of the Litigation Management Committee, the number of litigation reviews, and the results of the reviews (number of approvals and disapprovals).

Also, the draft amendment to the Enforcement Decree of the Insurance Business Act, currently under legislative notice, stipulates that the insurance period of insurance products that small-amount short-term specialized insurance companies can solicit should be set by the supervision regulations within the range of "up to 2 years." Considering that the system is in its early stages, contract protection, and unexpected risk occurrences, the insurance period for small-amount short-term insurance has been set to one year.

Furthermore, considering the balance of supply and demand in the foreign exchange market and the expansion of overseas investment limits, the foreign exchange position limit will be raised from 20% to 30% of the solvency margin.

This takes into account that the current limit is relatively low compared to other sectors (banks and financial investment, 50% of own capital), and risks arising from increased foreign exchange open investments will be managed through soundness supervision measures such as the Risk-Based Capital (RBC) ratio.

The Financial Services Commission plans to implement the revised Insurance Business Supervision Regulations within the first half of the year after going through the notice of regulation changes, regulatory review, and approval by the Financial Services Commission. The notice of regulation changes will be conducted for 40 days from the 12th of this month until the 21st of next month.

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