Overflowing Insurance Comparison Sites... Will 'Kakao' Get Caught in the Crossfire?

Kakao Announces Suspension Ahead of Financial Services Act Enforcement
Similar Comparison Quote Service Providers on High Alert

[Asia Economy Reporter Oh Hyung-gil] As KakaoPay announces a full suspension of its auto insurance comparison service ahead of the application of the Financial Consumer Protection Act, the ripple effects are spreading throughout the insurance industry. Attention is focused on how this will impact not only fintech companies offering similar services but also the numerous insurance comparison and quotation websites flooding the internet.

The criteria for distinguishing whether insurance comparison and quotation services are considered insurance brokerage or advertising remain unclear. Financial authorities plan to introduce a regulatory framework for online platforms performing insurance solicitation channel functions as early as next month.

According to the insurance industry on the 14th, insurance premium comparison quotation sites searchable on online portal sites vary in operators and methods, including those directly run by corporate agencies (GA) or online marketing companies collecting and providing personal information.

These sites mainly provide services that generate quotes for auto insurance premiums and compare them by insurer, and recently have been expanding into other insurance areas such as cancer insurance, dental insurance, and dementia insurance.

There is no significant difference from KakaoPay’s insurance premium comparison service, which is about to be suspended. They request insurance quotes from insurers partnered with them and provide that information. Some also gather and introduce premium information through the insurance premium comparison site operated by the Insurance Association, called Insurance Damoa.

The issue with KakaoPay, which provided such services through its subsidiary GA, was that platforms mediating financial products must comply with relevant regulations. In other words, sites operated by companies holding insurance product sales licenses are expected to avoid this regulation.

An insurance industry official said, "To mediate insurance products, one must have an insurance product sales license under the Insurance Business Act, but KakaoPay has been providing comparison services under the name of ‘advertising’ through its insurance subsidiary. Price comparison sites operated by GAs are unlikely to face immediate issues," he said.

However, the industry points out that the specific standards for online marketing activities are ambiguous, creating a ‘catch-all’ situation. Types of insurance marketing activities conducted online are broadly categorized as ▲posting insurance-related information ▲blog and viral marketing ▲comparison sites ▲coverage analysis and diagnostic services ▲customized advertising.

Among these, whether a site simply provides comparison site links or directly collects subscriber information and provides premium information greatly affects the likelihood of legal violations. There was a case where an insurance agency had bloggers post links to insurance comparison sites and paid commissions based on insurance contracts concluded through those links, resulting in institutional warnings and fines from financial authorities. Although it was advertising, it was judged not to be advertising.

The Insurance Business Act stipulates that anyone soliciting insurance without qualification faces imprisonment of up to one year or a fine of up to 10 million KRW. It also prohibits insurers or solicitors from having unqualified persons solicit insurance and paying commissions or fees to them.

Financial authorities had planned to prepare model guidelines containing legal definitions of insurance services, including solicitation and advertising distinctions, in the first half of the year but have postponed this to the second half.

Yang Seung-hyun, a research fellow at the Korea Insurance Research Institute, said, "Offline insurance marketing tends to be considered insurance solicitation when targeting specific individuals and solicitation advertising when targeting unspecified individuals. Since online insurance marketing often targets unspecified individuals, more detailed conceptual definitions and judgment criteria are necessary," he said.

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