The Boundaries of Insurance Sales Are Disappearing... "Fundamental Revision of Current Regulations Needed"

Boheom Yeon, Review of Improvements to Non-face-to-face and Digital Recruitment Regulations

[Asia Economy Reporter Oh Hyung-gil] Due to the advancement of information and communication technology (ICT), the boundaries between face-to-face sales, telemarketing (TM), and cybermarketing (CM) in insurance sales are disappearing, highlighting the need for a fundamental revision of the current insurance industry regulatory framework.

According to the report titled "Review of the Insurance Business Act: Examination of Key Improvements in Non-Face-to-Face and Digital Recruitment Regulations" released by the Korea Insurance Research Institute on the 13th, financial authorities have recently allowed telephone recruitment under certain conditions in face-to-face recruitment channels. They have also prepared improvement measures such as permitting the use of artificial intelligence (AI) voice bots for explaining important matters in TM recruitment channels and allowing hybrid recruitment methods combining telephone and mobile, and have announced legislative amendments related to these changes.

Since the end of March, the obligation to explain important matters has been transferred from the Insurance Business Act to the Financial Consumer Protection Act (FCPA). The FCPA explicitly stipulates the customer-facing obligation during face-to-face recruitment and defines the exceptions under which this obligation can be waived.

The report states, "It is generally prohibited for financial product sales agents and brokers handling protection-type products to explain important matters without meeting the general financial consumer face-to-face. However, if the explanation is conducted according to the standard product explanation script in the Insurance Business Supervisory Regulations, and the financial product direct seller handling the product verifies that the recorded electronic file of the explanation matches the standard script and retains that electronic file, the face-to-face obligation is exempted."

Furthermore, "In TM recruitment channels, under the current Enforcement Decree of the Insurance Business Act and supervisory regulations, TM recruiters must read the standard script directly, and the entire recruitment process, including product explanation and document preparation, must be conducted solely by telephone. The obligation to explain important matters under the FCPA can be fulfilled through AI voice bots based on TTS technology, and questions, explanations, and document preparation necessary for concluding insurance contracts, excluding the obligation to explain important matters, can be conducted using mobile devices," the report added.

However, the report points out, "The FCPA only requires that an 'explanation document' be provided so that financial consumers can 'understand the explanation,' without specifying detailed requirements. It raises the question of whether the use of AI voice bots is permissible in face-to-face recruitment channels."

It further emphasizes, "In the long term, a fundamental revision of the current regulatory framework that distinguishes between face-to-face, TM, and CM may be necessary. It is important for financial authorities, academia, industry, and consumers to engage in in-depth review and active opinion sharing to build consensus on both short- and long-term improvement directions."

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