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Aggregator Platforms that Compare and Recommend Insurance Products to be Permitted

2023.04.11

Financial supervisory authorities have decided to allow insurance consumers’ access to online aggregator services that compare and recommend online insurance products on platforms, such as MyData, and prepared the “Pilot Plan for Handling Insurance Products on Platforms,” which includes details for implementation. There has been intense controversy over whether a platform business can engage in insurance-related activities, but after prolonged consultations with interested parties to reconcile their opinions, the regulatory authorities have reached a final decision on this matter. The key details are as follows:

A.   Role of Platforms
 

  • Scope of services: The scope of the services that can be offered on online platforms is limited to (i) comparing and recommending insurance products to consumers and (ii) connecting consumers to insurers.

  • Scope of products: Platforms may provide comparison/recommendation services only for online products (other than products offered face-to-face or telemarketing products).

  • Type of products: Short-term insurances (fire insurances, traveler’s insurances, etc. with an insurance period of one year or less), automobile insurances, indemnity medical insurances, savings insurances (excluding annuity), pet insurances and credit life insurances are allowed. Health insurances have been excluded.

  • Requirements for operation: Platforms must have IT and algorithm personnel. The requirement for insurance agencies to have insurance planners accounting for at least 10% of their employees does not apply.
     

B.   Regulations for Consumer Protection 
 

  • Verification of algorithms: Platforms must be verified in advance by a specialized agency (such as Koscom) to ensure the fair and transparent operation of comparison/recommendation algorithms and must also inform consumers on key matters about the algorithms.

  • Business guarantee deposit: Platforms are required to deposit a business guarantee deposit (up to KRW 300 million per insurer) in proportion to the performance of the business in order to compensate for consumer damage. This obligation can be substituted by taking out liability insurance.

  • Data protection: Platforms are prohibited from using or providing to a third party the data processed in the course of comparing/recommending insurance products for purposes other than comparison/recommendation.

  • Commission: Commissions that platforms receive from insurers are limited to up to 33% of the face-to-face sales commission for short-term insurances and up to 15-20% of the face-to-face sales commission for long-term insurances. Accordingly, the commission for automobile insurance products will be less than 5% of the insurance premiums.

  • Regulations on sales activities: Platforms must comply with the restrictions on the provision of special benefits under the Insurance Business Act.

  • Information to be provided to consumers: Platforms should inform consumers that insurance premiums may vary when they subscribe to an insurance through the platforms’ service or when they subscribe directly through an insurers’ website.
     

C.   Regulations for Fair Trade
 

  • Prevention of concentration on certain insurers: Platforms may not refuse an insurer’s request for partnership without just cause.

  • Prevention of abuse of superior position: Platforms are prohibited from abusing their superior position to make unreasonable request to insurers.

  • Transparency of commissions: Platforms may not charge additional commissions or request benefits other than the commissions set forth in the agreement (rates shall be disclosed on the website). 
     

The above plan will be implemented on an expedited basis after going through the process of innovative financial services between April and June. Consumers will be able to (i) compare the online insurance products of various insurers through platforms, (ii) receive recommendations for suitable products, and (iii) subscribe to the products through insurers’ website as early as the end of this year.

 

[Korean Version]

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