As a follow-up to the Plan to Reform Regulations to Help Financial Companies’ Global Business Expansion, announced at the Eighth Financial Regulation Innovation Meeting in July 2023, the financial authorities have decided to amend the Enforcement Decree of the Insurance Business Act to streamline certain relevant procedures (the “Amendment”). The Amendment includes an expansion of the scope of overseas subsidiaries subject to prior reporting (rather than prior-approval) for investment, and the relaxation of the “25% rule” applicable to credit card companies engaged in the sale of insurance products. The Amendment, once it takes effect, will (i) help to lower the hurdle for insurance companies planning to expand their overseas presence and (ii) relax the regulations on “cardsurance” distribution (i.e., insurance products distributed through credit card companies).
 

• The procedures for insurance companies to invest in overseas companies engaged in activities closely related to insurance, such as healthcare services, consulting services for insurance contracts and loans, and operating senior welfare facilities, will now be subject to prior reporting to, rather than requiring an “approval” from, the financial authorities.
   

• Insurance companies wishing to provide insurance brokerage services through overseas subsidiaries will now be subject to prior reporting.

• Investments by insurance companies in overseas subsidiaries categorized as “offshore financial companies¹” will now be subject to prior reporting.
   

• Under the existing Enforcement Decree, credit card companies were prohibited from selling any single insurer’s products in excess of 25% of all insurance products being sold by the card company. Under the Amendment, if credit card companies cannot comply with the 25% rule due to the fact that there are four or less insurers who offer cardsurance products, the card companies will be subject to an increased concentration limit of 50% rather than 25%.
   

The Amendment will be in a pre-announcement period until November 22, undergo review by the Ministry of Government Legislation, and resolution at the Vice-Ministerial Council and the State Council, and is expected to take effect on January 1, 2024.
 

¹   An “offshore financial company” refers to a company established under the laws of another country with the main purpose of generating profits by investing in securities, bonds, and derivatives directly or through its subsidiaries.

[Korean Version]