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Newsletter | February 2014, Issue 1
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INSURANCE |
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Improvement on Operating Expense System for Savings-Related Insurance Products |
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On December 27, 2013, the Financial Services Commission (“FSC”) adopted a resolution for a proposed amendment to the Insurance Business Supervisory Regulations which primarily “improves the operating expenses system for savings-related insurance products” (“Amendment”). The Amendment was adopted to strengthen the efforts in the continuance and management of insurance and to increase the premium refund ratio for early termination of an insurance contract through insurance agents (including insurance companies, insurance agencies, etc.). The following is a summary of the details of the Amendment.
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Increase in Commissions Distribution Ratio Payable to Insurance Agent after Conclusion of Insurance Contract
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The commission distribution ratio will be gradually increased to fifty percent (50%) for a solicitor through the general distribution channel, while the distribution ratio for bancassurance distribution channel and cyber-mall distribution channel will also increase by seventy percent (70%) and one hundred percent (100%), respectively.
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Classification/Distribution
Channel |
Current |
2014 |
2015 |
2016 |
2017 |
Distribution
Ratio of
Annuity
Savings-
Related
Insurance |
General Solicitor |
30% |
40% |
50% |
50% |
| Life Annuity |
25% |
35% |
40% |
| Bancassurance |
30% |
60% |
70% |
70% |
| Cyber-Mall |
30% |
80% |
100% |
100% |
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The increase for 2015 will be effective from January 1, 2015, while the application of the proposed increases from 2016 will be determined after reviewing the enforcement results at the end of 2015. |
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Reduction in Commissions for Bancassurance Distribution Channel and Cyber-Mall Distribution Channel
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Commissions for savings-related insurance products sold through bancassurance distribution channel or cyber-mall distribution channel will be gradually reduced to fifty percent (50%) compared to the general solicitor distribution channel.
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| Classification |
Current |
2014 |
2015 |
2016 |
2017 |
| Cost of Conclusion of Insurance Contract via Bancassurance Distribution Channel and Cyber-Mall Distribution Channel (as compared to General Solicitor Distribution Channel) |
70%
(no separate limitation for the Cyber-Mall Distribution Channel) |
60% |
50% |
50% |
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The reductions for 2015 will be effective from January 1, 2015, while the application of the proposed reductions from 2016 will be determined after reviewing the enforcement results at the end of 2015. |
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Obtaining Post-Acquisition Sales Commissions for Variable Life Insurance Products through On-line Sales Allowed
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On-line sales for variable life insurance products that deduct sales commissions from reserves and not from the insurance premiums, which is similar to savings and fund products, are now permissible without any prior reporting requirement.
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If you have any questions regarding this article, please contact below: |
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