"Efforts Needed for Complete Sales and Fair Insurance Payouts Over Short-Term Profits"

Financial Supervisory Service Announces Insurance Supervision Work Plan

The Financial Supervisory Service (FSS) explained its business plan for the insurance sector this year and called for self-reflection within the industry. It emphasized the need to focus on complete product sales and fair insurance claim payments rather than pursuing short-term profits. Along with this, with the implementation of new solvency regulations such as the new accounting standard 'IFRS17' and the new solvency regime (K-ICS), insurance companies are expected to proactively manage risks, and the authorities plan to ease the burden on insurers.

On the 22nd, the FSS held a business briefing session for the insurance sector at its headquarters in Yeouido, Seoul, emphasizing these points. Cha Suhwan, Deputy Governor of the FSS, stated, "This year, we will focus on strengthening the stability of the insurance industry while actively promoting institutional improvements so that the insurance industry can achieve innovative growth based on consumer trust."

He also stressed that risk management will be strengthened proactively through measures such as refining the evaluation of alternative investments, and that the burden of solvency management on insurers will be eased through the implementation of transitional measures for the K-ICS system. The FSS plans to inspect risk factors of insurance companies arising from market fluctuations and concentrate monitoring capabilities on vulnerable risk areas such as project financing (PF) loans.

Efforts by insurance companies to change consumer perceptions were also pointed out as necessary. Deputy Governor Cha said, "The FSS will continue to promote institutional improvements for consumer protection, including improving the recruitment system and strengthening disclosure of insurance claim payments to guarantee consumers' right to know," and urged, "Insurance companies should also strive for complete sales and fair insurance payments rather than being obsessed with short-term profits."

The FSS plans to establish systems to foster a culture of complete sales, including analyzing the impact of recruitment commission regulations and reviewing improvement measures. It also aims to encourage the establishment of fair insurance claim payment practices by improving the standards for insurance company consent in appointing independent loss adjusters and reforming the disclosure system for non-payment rates of insurance claims.

Additionally, the FSS will promote institutional improvements such as discount and surcharge systems for long-term non-subscribers of automobile insurance and enhancing the sustainability of indemnity health insurance. Alongside revitalizing pension insurance, it plans to expand private social safety nets by granting interest rate choice options to insurance contract loan borrowers.

Innovation within the insurance industry itself was also urged. The FSS highlighted the need to actively explore sustainable growth strategies for the insurance industry, including expanding the scope of work through non-face-to-face channels.

Meanwhile, the FSS stated that it will actively reflect the industry opinions and suggestions discussed at this briefing in its future supervisory and inspection tasks. An FSS official explained, "We plan to continuously create communication channels with the insurance industry and others to carry out field-oriented and effective supervisory work."

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