Implementation of Amendment to Insurance Business Supervisory Regulations for Reform of Insurance Sales Commission System

As advised in our previous update (link), the financial supervisory authorities had published a draft amendment to the Insurance Business Supervisory Regulations on June 13, 2025, to reform the insurance sales commission system. The proposed amendment included (i) the introduction of policy maintenance commissions, (ii) application of the 1,200% rule to GA’s agents, (iii) the establishment of product committees, and (iv) the expansion of the scope of product comparison/disclosure requirements for large GAs. Following consultations with insurers, GAs, and other industry stakeholders, the amendment was finalized and approved at a regular meeting of the Financial Services Commission on January 14, 2026. The key details of the amendment are as follows:

Introduction of a Graded Commission Payment System

The amendment introduces (i) a new policy maintenance commission, to be paid over the policy maintenance period (up to seven years), and (ii) an additional long-term maintenance commission, to be paid for policies maintained for five years or longer.
The 1,200% rule, previously not applicable to GA’s agents, will apply to GA’s agents.^[1]
The period of prohibition on arbitrage transactions will be extended from one year to the full term of the insurance policy.

Expansion of Disclosure Requirements for Sales Commissions

Insurers will be required to (i) compare and disclose sales commissions by product category, and (ii) provide a detailed breakdown of upfront commissions and maintenance commissions, on the Insurance Association's website.
When selling insurance products, agents of a large GA (with 500 or more agents) will be required to (i) provide a list of products offered by the insurers affiliated with the GA and (ii) explain the commission of the recommended product in comparison to the average commission of similar products, and indicate its relative grade (on a five-level scale)^[2].

Establishment of a Rational Framework for Managing Sales Commissions

The role of the insurers' product committees will be strengthened so that they can oversee the entire process from the development of insurance products through sale and post‑sale management.
Upfront commissions and maintenance commissions must not, respectively, exceed the contract acquisition costs determined at the product design stage.

In consideration of current market status, the amendment will be implemented in multiple phases. First, the requirement to compare and disclose sales commissions, the enhanced functions of product committees, and the extended period of prohibition on arbitrage transactions will take effect from March 2026. Subsequently, from July 2026, the 1,200% rule will apply to GA's agents, and the enhanced disclosure obligations on large GAs will take effect. Finally, the graded commission payment system will become effective from January 2027, whereby a four‑year commission grading structure will be applied through 2028, and a seven‑year grading system will be implemented starting in January 2029.

[1] GA’s operating expenses for maintaining internal control personnel and related functions may be excluded, up to a limit of 3% of the monthly insurance premiums.
[2] “Very High” (130% or more), “High” (110–130%), “Average” (90–110%), “Low" (70–90%), and “Very Low” (70% or less).

[Korean Version]

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