Blocking Large Conglomerate Family's Bid Rigging Through Insurance Agencies

Assemblyman Kim Byung-wook Proposes Amendment to the Insurance Business Act

[Image source=Yonhap News]

[Asia Economy Reporter Oh Hyung-gil] A legislative amendment is being proposed to block the practice of large conglomerate owners funneling commission work through insurance agencies.

On the 19th, Kim Byung-wook, a member of the Democratic Party of Korea, announced that he has taken the lead in proposing a partial amendment to the Insurance Business Act. The amendment prohibits special related parties such as family members or relatives of the owners of publicly disclosed corporate groups, or former executives and employees, from establishing insurance agencies or brokers and exclusively handling insurance contracts with companies belonging to those corporate groups to excessively obtain commissions.

Under the current law, insurance agencies or brokers are prohibited from engaging in "self-contracts" to promote fair competition in insurance solicitation. A self-contract refers to soliciting insurance where the policyholder or insured is oneself or someone employed by oneself.

However, some large conglomerates are circumventing the regulation that prohibits self-contracts exceeding 50% by operating self-agencies through employing relatives and acquaintances in a devious manner.

Rep. Kim said, "To ensure fair competition in insurance solicitation and enhance the rights and interests of insurance consumers, we have strengthened the legal grounds regarding the scope and penalties of self-contracts," adding, "We have blocked the practice of large conglomerate owners funneling work through insurance agencies, which had continued as a custom, and eradicated excessive insurance premium discounts and commissions."

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