Although easing regulations on non-face-to-face solicitation has been a long-awaited project in the insurance industry, such deregulation has not come to fruition until now out of concern for protection of policyholders considering the complexity of many insurance products.  However, with the structural changes in solicitation channels such as the latest trend of non-face-to-face encounters and the expansion of general agencies (GAs) due to the COVID-19 pandemic, the Financial Services Commission devised measures to ease regulations and proposed an amendment to the Enforcement Decree of the Insurance Business Act and Insurance Business Supervisory Regulations (hereinafter collectively referred to as the “Amendment”) on May 17, 2021.  The Amendment will take effect in the third quarter of 2021.  The details of the Amendment are as follows: 
 

1.   Improvements in Face-to-Face Solicitation Process

• Under the existing regulations, in-person channel insurance solicitors have to meet with customers at least once during the solicitation process.  However, under the Amendment, these in-person insurance solicitors can solicit sales without meeting customers face-to-face if solicitors have an automated system to record the call and explain material terms of the policy.

• The existing regulations require customers to sign repeatedly when subscribing for insurance on a mobile device.  However, the Amendment makes it sufficient for customers to sign only once during the mobile subscription process by clicking the signature box after checking material terms of the contract and other document details. 

2.   Improvements in Telemarketing Process 

• The Amendment will allow insurance solicitors to use AI-based voice bots using text-to-speech technology when telemarketing insurance products.  However, customers must be able to control the explanation speed and volume, and insurance solicitors must be able to respond immediately when customers ask a question.

• The Amendment will allow a hybrid-type solicitation whereby telemarketers send an insurance application form and product description via a mobile phone and obtain electronic signatures from customers to execute the insurance contract. 

3.   Improvements in Monitoring of Sales Practices

• As with telemarketing, the Amendment will allow the use of AI-based voice bots for quality assurance calls (i.e., “Happy Calls”), and enable quality assurance check via e-mail or text message for all insurance products if customers wish to do so.  However, phone-based quality assurance calls will still be required for elderly customers aged 65 and above, as they are generally less familiar with the digital devices.

Based on the Amendment, insurance companies are expected to engage more in non-face-to-face/digital solicitation in the future.  Further, following are some other possible changes that are currently being considered for adoption: solicitation using video calls, shortening of standard phone solicitation scripts, and use of mobile subscription via digital technology.  As such, we expect non-face-to-face trend and digitalization of the insurance solicitation process to only accelerate in the future.