KIM&CHANG
Newsletter | August 2014, Issue 3
INSURANCE
Measures to Reduce Mis-Selling of Insurance Products
In order to accommodate various opinions from academia and businesses with regards to possible measures to reduce the mis-selling of insurance products, the Financial Supervisory Service (“FSS”) held a seminar on January 21, 2014 in collaboration with the Korea Life Insurance Association and the General Insurance Association of Korea.  Also, on April 10, 2014, the FSS announced its plans to enforce the resolution plan to reduce the mis-selling of insurance products based on the main points discussed at the seminar.
Implementation of the Solicitation Information Reference System Targeted to Insurance Solicitors
In order to systematically manage insurance solicitors who are highly likely to engage in mis-selling and violate solicitation rules, the FSS will implement a system that shares information on insurance solicitors including, but not limited to, details of legal/regulatory violations, details of sanctions, and number of insurance contracts terminated and/or cancelled.
Preparation of an Evaluation Indicator for Insurance Solicitors
The FSS will prepare an objective evaluation indicator for insurance solicitors by utilizing the data collected through the Solicitation Information Reference System.
The FSS will utilize the evaluation indicator for appointing of insurance solicitors, managing solicitation organizations and internal controls.
Activation of an Audience Regime of Consumer Opinions of Insurers
The FSS will invite insurance consumers to actively participate in the development of insurance products and advertisement reviews to prevent potential consumer complaints.
Prevention of Unfair Solicitation of Variable Life Insurance Products
The FSS aims to prevent unfair solicitations by improving the application of the appropriateness principle for soliciting variable life insurance products.
The FSS will operate an Unfair Solicitation Report Center (tentative) to root out unfair and illegal solicitations of variable life insurance products.
Prevention of Possible Mis-Selling for Non-Face-to-Face Solicitations
The FSS will inspect cybermalls (establishment of requirements, advertisements for insurance products, compliance of explanatory obligations, etc.) operated by insurers and insurance agencies, and will prepare a guidance plan.
The FSS will develop a plan to improve identifying inadequacies within product explanatory scripts used for telemarketing businesses.
Compliance Audits on Prevention of Mis-Selling
Different solicitation qualifications will apply based on the complexity of the insurance products – insurance companies must enhance insurance solicitors’ understanding of and expertise in insurance products by differentiating solicitation qualifications by preparing an internal qualification regime.
Unscheduled audits in operation training – insurers’ voluntary unscheduled audits on solicitation organizations to enhance the effectiveness of training.
Linking retention ratios of solicitation organizations to performance evaluation – utilize insurance solicitors’ retention ratio as a Key Performance Indicators.
Improve call script for monitoring sales of insurance products (“Happy Call”) – improve the script to facilitate meaningful monitoring on selling processes.
Self-monitoring of random purchases of variable life insurance products – insurers’ voluntary monitoring of random purchases of variable life insurance products and reflecting the results of such monitoring into Key Performance Indicators.
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If you have any questions regarding this article, please contact below:
Woong Park
wpark@kimchang.com
Young Hwa Paik
yhpaik@kimchang.com
Byung Min Choi
byungmin.choi@kimchang.com
For more information, please visit our website:
www.kimchang.com Insurance Practice Group