Newsletter | August 2015, Issue 2
	INSURANCE
	The Cabinet Passes the Proposed Amendment to the Insurance Business Act
	On June 2, 2015, the Cabinet passed the proposed amendment to the Insurance Business Act (the “IBA”), which aims to strengthen consumer protection and streamline regulation of the insurance business in the following ways.
	Strengthening of Consumer Protection
	In the case of group insurance for which the insured bears the insurance premium (e.g., mobile phone insurance), insurance companies will be required to provide the insured with materials describing the important terms of the insurance policy. A new provision will be introduced, which will allow comparison and disclosure of interest rates of loans by insurance companies. Insurance companies will be required to deal with claims for insurance proceeds filed by their policyholders in a fair and transparent manner.  Further, insurance companies will be prohibited from engaging in any improper act regarding payment of insurance proceeds, such as willful provision of false information to claimants.
	Streamlining Regulations
	Two obligations under the IBA will be abolished. - First, under the proposed amendment, an insurance company will no longer be required to file a report prior to engaging in a concurrent business for which an insurance company obtained approval or license under other laws. - Second, under the proposed amendment, an insurance company will no longer be required to file a report prior to engaging in an ancillary business, where the ancillary business is one for which another insurance company has filed a report. An exceptional clause, which will allow execution of a new policy in the case of policy transfer, will be introduced (e.g., where a domestic branch office of a foreign insurance company seeks to transfer its insurance policies upon being converted into a corporation).
	Strengthening Sanctions against Insurance Companies, etc.
	In case an entity or person, which / who has been subject to either a sanction of registration revocation or business suspension as an insurance agency, operates an insurance agency business by registering the new insurance agency under another entity or person’s name, such registration will be revoked. Legal grounds will be established for imposing light sanction, including the issuance of caution and warning, on insurance solicitors for breach of relevant laws and regulations. Administrative fines for breach of relevant laws and regulations will be increased.
	Enhancement of Regulations on Unfair Transactions between Insurance Company and Large Shareholder
	In addition to certain types of transactions with large shareholders*, all transactions with large shareholders other than standardized transactions will be subject to additional board resolution and public disclosure requirements. Where an insurance company has violated ad hoc disclosure obligations for transactions with a large shareholder, under the proposed amendment, administrative fines - of up to KRW 100 million - will be imposed. When an insurance company engages in unfair transactions with a large shareholder, the maximum level of criminal penalties and administrative fines that may be imposed will be raised. In addition, where a large shareholder has gained unfair profits from the transaction with an insurance company, under the Proposed Amendment, administrative fines will be imposed.
	Other Amendments
	When amending the insurance association’s regulation on review of advertisements, FSC’s prior approval will be required.  Also, for prior advertisement review system that is operated by the insurance association, the proposed amendment will include legal grounds for regulating them. - The regulators will be able to render corrective orders on advertisement review done by the insurance association when the insurance advertisement reviewed by the insurance association is found to be illegal and unfair. Request for consultation and joint audit on financial soundness of mutual aid associations. - The FSC will be able to request consultation with the supervisory central government agency on the mutual aid association’s financial soundness. - In turn, the central government agency supervising mutual aid associations will be able to request the FSC to conduct a joint audit to ensure the mutual aid association (in question) maintains its financial soundness.
	The FSC hopes that the proposed amendment to the IBA is passed at the National Assembly within this year, and is making efforts toward such a goal.
	* Examples of transactions with large shareholders include: (i) credit extension to a large shareholder; and (ii) acquisition of bonds and shares issued by a large shareholder.
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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