The presidential term of President Yoon Suk-yeol began on May 10, 2022. On May 3, 2022, prior to the start of Yoon’s administration, the Presidential Transition Committee announced 110 national agenda items (the “National Agenda”). President Yoon aims to minimize government intervention through multifaceted regulatory reforms—such as reforming the president’s direct oversight over “Regulatory Innovation Strategy Meetings”—with the ultimate goal of fostering “a dynamic economy led by the private sector and reinforced by the government.” Meanwhile, prior to this, the Financial Services Commission (the “FSC”) announced its 2022 business plan that aims to “support economic growth through financial stability and financial development.” In addition, the Financial Supervisory Service (the “FSS”) announced its 2022 business plan that aims to “achieve financial stability, financial innovation, and thorough protection of financial consumers” (collectively referred to as the “2022 Business Plan of the Financial Authorities”).
The key matters within the National Agenda and the 2022 Business Plan of the Financial Authorities that may affect the insurance industry are as follows.
1. Improving Existing Regulations
According to the National Agenda, the financial inspection and sanctions system will be restructured to enhance transparency and predictability in financial administration; the internal control system will also be reformed to bring about more accountable management in the financial sector. With respect to financial dispute mediation, the administration plans to increase independence in the operations of the FSS’s Dispute Mediation Committee. A Fast Track process shall also be introduced to shorten the dispute handling period.
In the same vein, the 2022 Business Plan of the Financial Authorities aims to “harmonize ex-ante and ex-post financial supervision” by designating a person in charge of information channels (such as the Communication Cooperation Division and Liaison) to facilitate business meetings and discussions between the FSS and financial companies. Moreover, in order to ensure preventive supervision for consumer protection, the financial authorities plan on strengthening supervision over the entire process of development, sale, and follow-up management of financial products. The authorities will further restructure the inspection system from the current comprehensive and partial inspection to regular and non-periodic inspection, and introduce a pilot self-audit request system.
2. Revision of Regulations on Big Tech and Creation of an Ecosystem for Innovative Digital Financial Services
The National Agendas stipulate plans on restructuring the regulatory system for the Big Tech industry, with a focus on preventing misselling and strengthening customer information protection. This is to adjust and improve regulations on Big Tech companies that have newly entered the insurance industry. More specifically, the 2022 Business Plan of the Financial Authorities claims that the authorities will (i) review measures to improve the supervisory system of each financial industry in order to promote competition and innovation following big tech’s entry into the financial market and to achieve financial stability and consumer protection, and (ii) prepare a new Korean-style plan to regulate big tech.
Meanwhile, the Yoon Administration plans to strengthen oversight on data collection and utilization, reform financial security regulations, and support the launch of innovative financial services using new technologies such as data and block chain, to promote an innovative digital financial ecosystem. Furthermore, with the aim of strengthening the competitiveness of the Korean financial industry, it will seek to reform regulations over the financial companies’ scope of business and allow the outsourcing of certain operations utilizing new technologies such as AI.
In this regard, the 2022 Business Plan of the Financial Authorities states that the authorities will (i) analyze and check the risk factors for consumer protection in the online virtual consulting and sales process to bring about improvements, and (ii) prepare specific working-level guidelines that reflect the characteristics of each type of AI financial service. Meanwhile, they also plan on encouraging companies to conduct self-inspection on new risks that may arise in the process of digitalization of the financial industry (such as Metaverse), and in the process of outsourcing work to a third party.
3. New Industries and Their Impact on the Insurance Industry
According to the National Agenda, the government plans to lay the legal and institutional foundation for digital health and medical MyData, and facilitate introduction of precision medical care based on big data. Healthcare services that insurance companies can currently provide through their subsidiaries will become more diverse in the future; through the medical MyData business, insurance companies will be able to use their customers’ medical data more conveniently in their business operations, such as in reviewing subscription to indemnity medical insurance or in providing healthcare services.
Meanwhile, the government plans to establish infrastructure and legal system to allow fully autonomous driving by 2027. Therefore, the auto insurance policies will need to be changed in line with the plan. Likewise, according to the 2022 Business Plan of the Financial Authorities, the Korean financial authorities will review the legal and regulatory regime on these policies, including the compensation procedure for automobile accidents, in preparation for the era of autonomous driving.
4. Other Important Matters
According to the National Agenda, the government plans to gradually mandate the retirement pension system and prepare measures to strengthen old-age income security. It also plans to promote customized pet insurance by registering pets and establishing a simple insurance claiming system. To the same effect, financial authorities plan to come up with measures to diversify the structure of pension products, including pensions for those with medical histories, and to review the needs to expand pension tax support and to introduce a subsidy system to private pensions in strengthening their social safety net function.
Further, the financial authorities will seek to prevent leakage by deceptive/excessive claims to improve the sustainability of indemnity medical insurance. The government plans to continue discussions with health authorities on matters such as the insurance coverage policy for unlisted/excluded conditions, and introduce a system to permit policy subscription via online platforms to promote the transition into the 4th generation medical insurance contracts.