Financial Supervisory Service Notifies Shinhan Life and KDB Life Insurance to Strengthen GA Management

[Asia Economy Reporter Changhwan Lee] The Financial Supervisory Service (FSS) has notified some life insurance companies to strengthen management, stating that they have been neglecting the poor solicitation practices of their affiliated corporate insurance agencies (GA).

On the 29th, the FSS announced that it had notified KDB Life and Shinhan Life on the 17th regarding management advisory points and improvement measures related to strengthening GA management systems.

According to the FSS, KDB Life operates to terminate consignment contracts if violations are confirmed with the contracted GAs, but since detailed standards have not been established, actual disciplinary actions have been insufficient.

Most cases where the company actually disciplined GAs were at the lowest level of action, a "warning," and even for insurance planners affiliated with GAs, if the individual showed remorse and the manager requested leniency, the level of sanctions was mostly reduced.

The FSS emphasized that KDB Life should specifically establish disciplinary guidelines by type of unfair practice to prevent unsound sales activities in advance through strict disciplinary measures against solicitation organizations and to raise awareness.

In the case of Shinhan Life, when signing consignment contracts with GAs, they are supposed to check the credit information of the GA representative and comprehensively review various sales soundness indicators, but there were cases where this was omitted.

Regarding unfair solicitation practices by insurance planners affiliated with GAs, cases were detected where different violation reasons were imposed sanctions on the same insurance planner, resulting in overlapping suspension periods, or where delays in computerized processing of suspension periods allowed insurance planners under suspension to solicit new contracts.

The FSS pointed out the need to revise related standards and procedures to ensure consistency among solicitation channels during the insurance planners’ own disciplinary procedures and to prevent omission of disciplinary effects, thereby securing the effectiveness of internal disciplinary actions.

Both companies also showed areas for improvement related to GA briefing sales. Briefing sales are a sales method where insurance planners use legally mandated workplace training or seminar times to introduce products and encourage group subscriptions. Since product explanations are given in a relatively short time, there is a possibility of incomplete sales due to consumers not fully understanding the product details.

The FSS explained that KDB Life’s on-site inspection standards and procedures for briefing sales GAs, as well as preemptive control and management procedures for explanatory materials used by GAs in sales sites (such as brochures, leaflets, and PPT materials), were insufficient.

Additionally, the FSS pointed out that due to restructuring impacts such as the departure of exclusive insurance planners and the reduction of partnerships with GAs that have nationwide sales organizations, KDB Life’s dependence on briefing sales GAs has increased, leading to a rise in incomplete sales and related complaints.

Shinhan Life was also requested to increase on-site inspections of briefing sales GAs and improve specific standards and procedures regarding evaluation methods, implementation criteria, timing, inspection items, and content.

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