As part of the pan-government project for deregulation, the Financial Services Commission (“FSC”) recently decided to relax 16 regulations on the insurance business and issued a notice of forthcoming legislation to do so.  Major amendments to the Insurance Business Supervision Regulation (“Regulation”) to be included in the legislation include the following: 

Differentiation of the level of regulation reflecting the distinctiveness of the solicitation channel 

• When a financial institution, such as a bank, solicits insurance, in general, the bank has been required to compare the concerned product with and explain three or more similar products that are sold through bancassurance channels, but they will be exempted from such obligation for Internet sales. 

Simplification of the obligation to compare and explain, as necessary, for consumer protection 

• For car insurance, where the products are standardized, the duty of comparison and explanation is deemed to be performed by showing the insurance premiums that are posted on the comparison system of the Insurance Association,  
• The duty of comparison and explanation is exempted for insurance purchased by corporate customers and for certain simple insurances. 

Promotion of consumer convenience through expansion of provision of e-documents 

• In telemarketing, with the consumer’s consent, it is permissible to provide product information in the form of an e-document. 
• In Internet sales, contract documents can be provided in the form of e-documents, and upon a policyholder’s specific request, a written document should be delivered to the policyholder. 

Additional changes 

• When an insurance company receives medical consulting, it should explain the reason, etc. for obtaining such consulting services to its policyholders, and if the insurance company accepts the consulting result and decides to reduce or not pay insurance proceeds, it should explain the consulting result, etc. to the policyholders. 
• Regarding large corporate insurance agencies with 500 or more solicitors, independence of the compliance officer will be strengthened, the business guidelines for internal control will be specified, and annual selling education will be conducted for the solicitors with a certain number of mis-selling records in the previous year. 

The FSC intends to implement the above amendments in September 2019.