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2021 FSC and FSS Work Plans Impacting the Insurance Industry

2021.02.26

The Financial Services Commission (the ″FSC″) and the Financial Supervisory Service (the ″FSS″) announced their respective work plans for 2021. 

Key details regarding the FSC′s plan for achieving digital innovation of the insurance industry and the FSS′s work plans are as follows:  

1.   FSC Work Plan for 2021
 

With a Focus on the Plan for Digital Innovation in the Insurance Industry

The FSC announced its work plan for 2021.  Set forth below is a summary of the plan for digital innovation of the insurance-related financial industry unveiled as part of the above plan.

1)   Promotion of Non-Face-to-Face Financial Services

  • The FSC will establish ″Guidelines for Non-Face-to-Face Identification and Verification in the Financial Industry″ that set forth requirements, procedures, etc. for identification and verification to ensure that online and mobile financial transactions will be conducted in an easy and safe manner based on new technologies, such as fingerprint identification and face recognition technologies.

  • The FSC will propose an amendment to the Electronic Financial Transactions Act to prevent damage to consumers arising from the separation of production and sale of insurance products and ensure fair competition in the process of comparing financial products for sale.

    • The FSC will actively provide the interpretative ruling on relevant laws/regulations and the examples of best practices in relation to platform-based financial services.

2)   Facilitation of the Digital Innovation in the Insurance Industry

  • The FSC will grant licenses to the business specialized in micro-insurance products and digital insurance companies.

    • The FSC will establish specific guidelines for relaxing the regulations on granting only one license per insurance group.

  • The FSC will improve the regulations on the ownership of subsidiaries by insurers to facilitate their investment in and development of new industries, such as platform, My Data and healthcare businesses.

  • The FSC will consider allowing insurers to outsource core insurance businesses (e.g. underwriting, claim adjustment, and payment of insurance proceeds) to tech companies to facilitate digital innovation in the insurance industry such as calculation of insurance premiums based on AI and big data.

  • The FSC will build a regulatory system for platform-based insurance services and relax the regulations on non-face-to-face and digital solicitation.

    • The FSC will set up regulatory systems (e.g., guidelines, regulations on the entry into the insurance industry, and code of conduct) for insurance platforms to facilitate positive functions such as comparison of products.

      (e.g., to release solicitors from the duty to have one or more face-to-face meetings with policyholders, allow a hybrid-type (combination of telemarketing and mobile marketing) solicitation, allow the solicitation via video call or chat bot under the condition of consumer protection measures, and allow AI voice bots to perform the duty of explanation using the text-to-speech technology in telemarketing)

    • The FSC will relax the regulations on entry to allow fintech companies to act as insurance agents.

    • The FSC will (i) enhance the convenience of consumers by modernizing the system of calculating the repair costs for automobile accidents based on AI and other digital technologies and thereby accelerating the process of paying insurance proceeds and (ii) improve the insurance fraud prevention system utilizing big data.


2.   FSS Work Plan for 2021
 

1)   Stability of the Financial Markets

  • The FSS will closely monitor financial companies′ management of credit risks.

    • The FSS will strengthen the capital and reserve regulatory requirements for financial companies to prepare for risks, in particular default risks related to COVID-19.

  • The FSS will better manage systemic risks that have the potential to result in a significant disruption to the industry or the broader economy.

    • The FSS will improve market surveillance and monitoring systems with the aim of better managing system risks.

2)   Protection of Financial Consumers and Promoting Fair Competition in the Financial Markets

  • In line with the implementation of the Financial Consumer Protection Act, the FSS will make changes to the existing regulatory framework governing marketing and selling activities by financial companies and strictly enforce regulatory breaches in these practices with the goal of strengthening protection of financial consumers.

    • The FSS will make senior management of financial companies more accountable for preventing harm to consumers.

  • The FSS will closely monitor financial companies′ violations disrupting the sound trade order in the course of marketing and selling high-yield investment products.

  • The FSS will review and make necessary changes to the relevant regulations to ensure that financial regulations are applied consistently across financial companies and internet platform businesses that provide financial services in the course of their ordinary businesses.

3)   Financial Consumer Complaints and Dispute Resolution

  • As a part of promoting fairness in the FSS′s dispute resolution process, the FSS will expand the scope of cases that can be brought before the Financial Dispute Mediation Committee, an internal organization within the FSS.

    • The FSS will establish standards that require certain disputes meeting the relevant requirements to be handled by the Financial Dispute Mediation Committee.

  • The FSS will expand and restructure the relevant organizations to dedicate to resolving complaints and financial disputes, thereby expediting the resolution process.

4)   Improvement of Supervision Framework

  • The FSS will strongly support innovation in the financial markets by actively engaging in reviewing licenses for new types of financial businesses.

  • In light of the significant increase in the number of online financial transactions, the FSS will promote enhanced management of cybersecurity risks faced by financial companies.

  • The FSS will implement changes and innovations in its examination and supervision methodologies.

 

[Korean version]

Related Topics

#Insurance #Legal Update

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