On September 9, 2021, the Financial Services Commission (the “FSC”) announced proposed amendments to the Enforcement Decree of the Insurance Business Act and the Regulations on Supervision of Insurance Business to address consumer protection and innovation in the insurance industry. The key contents of the proposed amendments are as follows:
1. Insurers’ duty to explain will be expanded.
- When executing an insurance contract, the insurer must explain to the policyholder the time limit for bringing claims for insurance proceeds under the Commercial Act.
- The insurer must explain to the insured the criteria it uses to decide whether or not to accept a request by an insured for an appointment of a claim adjuster in the course of claiming insurance proceeds. If the insurer agrees to the appointment of a claim adjuster, the insurer will bear the cost.
2. Insurers will be allowed to concurrently engage in the electronic prepayment service.
- Insurers will be allowed to concurrently engage in the electronic prepayment service to the extent necessary for the operation of healthcare services. Thus, an insurer may provide its own points to consumers based on their healthcare efforts and performance, and consumers may use the points to purchase health products or pay premiums.
3. The requirements for suspension of review of insurance business licensing will be improved.
- In order to prevent delays in insurance business licensing review and enhance predictability, the requirements for suspension will be subdivided and specified in accordance with basic principles such as materiality and clarity.
- Also the supervisory authority will review every six months whether to resume reviewing a case where the review has been suspended.
4. The public nature and accountability of claim adjustment will be strengthened.
- Korean Claim Adjuster Association will prepare standard claim adjustment guidelines and recommend claim adjusters to comply with them.
- Large claim adjusters (with 100 or more employees) are required to comply with the work guidelines (including business handling procedures, conflict of interest prevetion system and consumer protection system) set by the financial supervisory authority.
Under the proposed amendments, policyholders are expected to more actively appoint claim adjusters in the event of disputes regarding the calculation of insurance proceeds. In addition, insurers are expected to expand their healthcare business through the electronic prepayment service.
The pre-announcement period during which the public is invited to submit its opinion is until October 19, 2021.