Financial Services Commission: "Paving the Way for the Emergence of 'Specialized Insurance Companies' Like Animal Insurance"

Financial Services Commission Announces 'Regulatory Improvement Measures in the Insurance Sector'

Video Call Insurance Enrollment Now Available

[Asia Economy Reporter Sim Nayoung] The Financial Services Commission announced that it will grant approval for the entry of specialized insurance companies by product, such as pet insurance, even if there is an existing insurance company within the group. To promote the entry of specialized insurance companies, it plans to remove the 'one company, one license' approval policy that has so far allowed only one life and one non-life insurance company per insurance group.

Regarding product-specialized insurance companies, the exclusive agent regulations will also be relaxed to encourage new entries. Until now, agents could only solicit products from the company to which they were exclusively affiliated, but going forward, they will be allowed to solicit products from subsidiaries (product-specialized insurance companies) of the company to which they are exclusively affiliated.

On the 20th, the Financial Services Commission announced the 'Regulatory Improvement Plan in the Insurance Sector' containing these details. Additionally, for insurance companies whose online sales were restricted due to previous approval policies, the use of CM channels (mobile, homepage) will be permitted.

The recruitment regulation system will be transformed to activate digital and non-face-to-face insurance solicitation. Solicitation using video calls and hybrid methods (TM (recommendation) + CM (explanation, application)) will be allowed.

Institutional measures to prevent mis-selling will also be established. Evidence such as contract holder responses or confirmation log records must be retained to replace voice recordings.

To enable insurance companies to develop diverse products, consumers will be allowed to receive items and pre-management products linked to insurance products that reduce the risk of insurance accidents. Examples include gas leak detection devices for homeowners fire insurance and pet dewormers for pet insurance.

Currently, the provision of pre-management products is restricted due to the obligation to prohibit special benefits, but if the risk reduction effect of insurance accidents is objectively and statistically verified and benefits consumers, regulations will be relaxed accordingly. The limit on the amount of special benefits provided will also be expanded from 30,000 KRW to 200,000 KRW.

To develop pension insurance in a form suitable for long-term pension maintenance and increased pension amounts, regulations on surrender refund rates focusing on protecting early terminators will also be relaxed. For savings-type insurance (including pension insurance), the surrender value will be designed to exceed the paid principal until the completion of principal payments, ensuring sufficient amounts for early terminators.

Furthermore, the Financial Services Commission announced the abolition of the derivative transaction limit (6% of total assets) to allow insurance companies to manage interest rate risks stably through derivatives. The bond issuance limit regulation will also be relaxed to prevent temporary limit exceedance issues during bond refinancing. Existing issued bonds (scheduled for redemption) will be recognized as exceptions to the limit during refinancing.

Sales restriction sanctions will also be improved. The criteria for imposing fines on violations of basic document (terms and conditions, etc.) compliance, which have been uniformly fined even without consumer damage, will be revised to limit fines to cases where 'consumer damage or unfair profits occur.'

Fines for excessive reserve accumulation due to insurance company negligence will be exempted, and grounds for minor disciplinary actions against insurance agents will be established, allowing measures such as caution and warnings for minor violations.

To provide prompt complaint services, the Insurance Association will also be allowed to handle simple inquiries with low dispute potential or complaints about staff rudeness. However, dispute complaints related to insurance payments where interests conflict between insurance companies and consumers will continue to be handled by the Financial Supervisory Service as before.

The Financial Services Commission stated, "We will innovate outdated regulations so that the insurance industry can flexibly respond to new service demands such as the spread of the digital economy and aging population, and realize specific business models desired by the market." It added, "This plan was deliberated at the 4th Financial Regulatory Innovation Meeting on the 14th and we will proceed with follow-up measures such as preparing legislative amendments aiming for submission and passage in the 21st National Assembly."

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