The cabinet passed an amendment to the Enforcement Decree of the Insurance Business Act (“IBA”) during its meeting on June 18, 2019. The main focus of the amendment is to promote InsureTech developments. The key changes are as follows:
First, the amendment will allow insurers to own FinTech companies as their subsidiaries, subject to the approval of the Financial Services Commission. Once the amendment becomes effective, insurers will be able to own companies that are primarily engaged in the types of businesses that are necessary for insurers’ efficient work performance and linked to the insurance business.
Further, the amendment will allow entities applying for an insurance business license to outsource data processing by using cloud services, whereas prior to the amendment, it was unclear as to whether cloud services could be used.
In addition to the foregoing, the following changes have also been adopted and will become effective from July 1, 2019:
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A limit will be introduced on the issuance of hybrid securities. The maximum total units of bonds and hybrid securities that can be issued will be limited to 100% of the equity as of the end of the preceding quarter.
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If a special purpose company (“SPC”) intends to become a major shareholder of an insurance company, shareholders who contributed 30% or more of the SPC’s capital or who serve as the SPC’s de facto controlling shareholders will have to satisfy the qualifications to be the major shareholders of an insurance company.
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Tenants of commercial properties will be allowed to enter into an insurance contract to protect their goodwill in the lease without obtaining the landlord’s consent.
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Administrative fines of up to KRW 100 million will be imposed on any insurance agency which breached its duty to disclose material business information, including the mis-selling ratio.
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