The Financial Services Commission and the Financial Supervisory Service held the 6th session of the Insurance Reform Meeting on January 21, 2025, and decided to ease the sales ratio restrictions applicable to bancassurance sales, which had been in place for the past 19 years. The decision came in response to some insurers ceasing to offer bancassurance products, which led to the view that improvements to the current regulations were necessary.
For now, the supervisory authorities have elected to implement the proposed changes through the “Innovative Financial Services System,” (the financial regulatory sandbox), without immediately amending the regulations. Under the current plan, they will assess a formal change to the regulations after a two-year trial period.
Thus, for this year (the first year of the implementation of the financial regulatory sandbox), the authorities will relax the previous sales ratio restriction of 25% to (i) 33% for life insurance products and (ii) 50% or 75% for non-life insurance products (50% if four or more non-life insurers offer bancassurance products and 75% if less than four non-life insurers offer bancassurance products), representing a significant relaxation of the current rules.
The proposed changes will, however, be subject to the following restrictions, to address concerns that financial institutions may elect to primarily distribute products of their affiliated insurers:
-
New limits on the ratio of affiliated insurers’ products (25% for life insurers and 33% or 50% for non-life insurers); and
-
New requirement for monthly disclosure of the sales ratio of each partner insurer’s products.
Additionally, to ensure wider consumer options and fair competition, the authorities will also require that the financial institutions provide their customers (i) a list of all partner insurers, (ii) explanations as to the basis for recommending any particular insurance product, and (iii) the applicable sales commissions for each product.
