Insurance Advertising Becomes More Complex with the Enforcement of the Financial Services Act: "Insurance Broadcasts Also Subject to Review"

'Advertising Regulations' Revision Initiated
Mandatory Disclosures Greatly Increased
Advertising Prohibitions Become Stricter

[Asia Economy Reporter Oh Hyung-gil] The insurance industry is strengthening self-regulation of insurance advertisements in line with the enforcement of the Financial Consumer Protection Act. Most insurance advertisements flooding TV, the internet, and YouTube must undergo review, and going forward, business advertisements and loan advertisements will also be subject to review. With an increase in mandatory disclosures and prohibited advertising practices, insurance advertisements are expected to become more complex.

According to the insurance industry on the 6th, the General Insurance Association recently announced a revision proposal regarding advertising regulations and has begun collecting opinions from stakeholders. The revision includes newly defined terms for business advertisements and loan advertisements, and reflects mandatory disclosures and prohibited acts for product advertisements, loan advertisements, and business advertisements under the Financial Consumer Protection Act.

The mandatory disclosures under the Financial Consumer Protection Act within insurance advertisements have significantly increased, with product advertisements now requiring 20 mandatory items. Business advertisements and loan advertisements have also newly established 11 and 10 mandatory disclosure items, respectively.

Going forward, product advertisements must include mandatory disclosures such as recommending consumers to read the product description and terms and conditions before entering into a financial product contract, and informing that if an existing contract is terminated and a new contract is entered into, the contract may be rejected, insurance premiums or other consumer payment costs may increase, or coverage details may change.

Additionally, the disclosures must include ▲ reasons for insurance payment under the basic contract and special contracts and the insured amounts ▲ number of payments and payment limits, deductibles, etc., for hospitalization fees, diagnosis fees, and actual medical expenses ▲ details of reduced insurance payments within a certain period ▲ coverage start dates for specific coverages such as cancer and dementia ▲ proportional sharing in case of overlapping subscriptions for insurance contracts that compensate actual damages ▲ reasons for insurance payment restrictions such as classifications of diseases defined in the terms and conditions, including high-cost cancer and 16 major diseases.

Furthermore, when a solicitation agent acts as a proxy or intermediary in selling products, they must disclose the name and business details of the insurance company they represent or mediate, whether they represent or mediate only one insurance company, and if the solicitation agent has not been granted the authority to conclude financial product contracts by the insurance company, they must inform consumers that they do not have the authority to conclude financial product contracts.

Prohibited advertising practices have also increased. It is prohibited to display insurance premiums on a daily basis or to include content that causes consumers to misunderstand that premiums are low by insufficiently explaining the basis for premium calculation. Comparing with other financial products or comparing insurance products or business conditions of other insurance companies without objective grounds is also prohibited.

Moreover, the role and authority of the Advertising Review Committee under the association have been significantly strengthened. The committee can now request correction or suspension of posting and distribution of advertisements if the advertisements cause consumer misunderstanding in subscription decisions or violate regulations.

Within the insurance industry, due to the establishment of advertising regulations reflecting the Financial Consumer Protection Act, some advertisements must be recreated and reviewed again. After the grace period for the Financial Consumer Protection Act ends in September, existing advertisements cannot be used, so advertisements reviewed in February may also need to be reviewed again.

Additionally, insurance consultation broadcasts on cable TV and other platforms will also be subject to review. While home shopping insurance advertisements have been reviewed so far, insurance consultation programs promoting 'insurance remodeling' and 'financial counseling' will also need to undergo review going forward.

An insurance industry official said, "Currently released video advertisements and outdoor advertisements are difficult to modify easily," and added, "While insurance terms are complex and require providing product descriptions, requiring all details to be explained in advertisements seems like excessive regulation."

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