Revised Insurance Sales Commission Regime Implemented Pursuant to Amended Insurance Business Supervisory Regulations

On June 30, 2026, the Financial Services Commission announced the details of its insurance sales commission reform plan pursuant to the amended Insurance Business Supervisory Regulations (the “Regulations”).

Following the amendment of the Regulations on January 14, 2026, the Financial Supervisory Service has been preparing for the phased implementation of its revised insurance sales commission regime. Accordingly, beginning July 1, 2026, (i) the “1,200% rule,” which limits first-year acquisition commissions payable to insurance solicitors to 12 times the monthly premium, has been extended to apply to insurance solicitors affiliated with general insurance agencies (“GAs”), and (ii) large GAs are subject to enhanced disclosure and explanation requirements when selling insurance products.

1.	Background on Implementation of Amendment

Implementation Schedule for Sales Commission Reforms under Amended Regulations

Timing	Matters To Be Implemented
March 2026	Comparative disclosure of sales commissions, expanded ban on churning/replacement transactions
July 2026	Extension of the 1,200% rule to insurance solicitors affiliated with GAs, enhanced comparison and explanation obligations for large GAs
January 2027 (planned)	Amortization of insurance solicitors’ sales commissions (four-year amortization from 2027 to 2028, seven-year amortization from January 2029)

2.	Key Amendments Effective as of July 2026

Extension of 1,200% Rule

For contracts entered into on or after July 1, 2026, the 1,200% rule, which limits first year acquisition commissions payable to insurance solicitors to 12 times the monthly premium, will also apply to solicitors affiliated with GAs.

Previously, the 1,200% rule applied to sales commissions paid by insurance companies to GAs, but did not apply at the stage where GAs paid commissions to their affiliated solicitors. As a result, GAs were able to pay sales commissions exceeding 12 times the monthly premium to their affiliated solicitors, thereby effectively circumventing the 1,200% rule.

The extended application of the 1,200% rule is expected to help eliminate regulatory arbitrage among sales channels, improve the effectiveness of the commission regime and reduce excessive competition over sales commissions.

Enhanced Obligation for Large GAs to Provide Comparative Information and Product Explanations

Beginning on July 1, 2026, large GAs (with 500 or more affiliated solicitors) will be required, during the insurance sale contracting process, to additionally explain matters such as the sales commission grade/ranking of similar insurance products and the reasons for recommending a particular insurance product.

Currently, large GAs are required, during the insurance contract process, to compare and explain at least three comparable or similar products and obtain a written acknowledgment from the customer confirming that such explanations were provided.

The required disclosure items have now been expanded to include additional information concerning sales commissions that may affect the consumer’s decision to enter into the insurance contract.

Newly Required Information to be Included

Item	Details
Sales Commission Grade	Five-level grade based on the commission level among the group of similar products (e.g., low/very high/moderate)
Sales Commission Ranking	Ranking among the recommended products
Reason for Recommendation	□ Coverage level □ Premium □ Purpose of enrollment □ Others
Insurers Eligible for Recommendation	List of life and non-life insurers whose products may also be recommended

Insurance companies and GAs should strengthen their sales frameworks with greater emphasis on product coverage, pricing and suitability for consumers. In particular, GAs will need to establish commission payment structures and internal control systems that comply with the amended Regulations. Insurance companies should likewise review their commission policies and sales practices applicable to GAs and strengthen their management and supervision of risks related to mis-selling and regulatory violations.

In doing so, they should also take into account the third-party risk guidelines, under which insurance companies are expected to assess matters such as internal controls and sound sales practices when outsourcing product distribution to GAs or other third parties.

In addition, the financial authorities’ future policy and regulatory developments regarding further reforms to the sales commission regime should also be taken into consideration.

[Korean Version]

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