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Financial Services Commission Announces Detailed Plan on Big-Tech’s Online Insurance Product Comparison and Recommendation Services


Through its press release on April 6, 2023, the Financial Services Commission (the “FSC”) announced a Detailed Plan on Online Platforms’ Pilot Offering of Insurance Products (hereby referred to as the “Detailed Plan”) in connection with “online insurance product comparison and recommendation” services provided by big-tech companies’ platforms (“Platforms”).

Until recently, providing comparison and recommendation services related to insurance products via Platforms was likely to be deemed an act of insurance brokerage, which is a regulated activity. This prevented big-tech companies without the relevant license(s) from offering such services. However, in an attempt to relax this regulatory barrier, the Detailed Plan now allows the Platforms to provide these services by designating them as “innovative financial services.” Below is a summary of the key provisions of the Detailed Plan:

1.   Limited Scope of Business

  • The scope of business for Platforms is limited to comparing and recommending insurance products and redirecting potential customers to the relevant insurance companies’ websites, rather than offering a full spectrum of services related to the overall solicitation/marketing process.

2.   Offered Products

  • Comparison and recommendation services are only allowed for online products (i.e., Cyber Marketing, otherwise called “CM” products), excluding products that necessitate further explanation via in-person meetings or phone conversations with a financial consultant.

  • Such CM products include not only short-term insurances, auto insurances, indemnity insurances, and savings insurances (except annuity plans), but also products with a high potential for market expansion such as pet insurances and credit life insurances. However, insurance products with complex product structures, such as private health insurances, are excluded from the scope of CM products.

3.   Consumer Protection Measures

  • To ensure the fairness and transparency of the algorithms used by Platforms to offer their comparison and recommendation services, Platforms are required to have the adequacy of their algorithms validated by an expert institution in advance and inform consumers of their algorithms’ key aspects.

  • Platforms are prohibited from using or transferring the information obtained/processed in the course of offering comparison and recommendation services for purposes other than providing such services.

  • Caps are placed on Platforms’ commissions to minimize the risk of significant increases in insurance premiums.

4.   Measures to Prevent Unfair Competition

  • Platforms may not reject an insurer’s request for a partnership without a justifiable reason and are required to give adequate prior notices to insurers upon the occurrence of important events.

  • Platforms are required to specify their commission calculation methods in agreement documents with insurers, and are prohibited from demanding additional commissions other than those specified in the agreement.

As Platforms are now allowed to provide insurance-related services, this will likely have a significant impact on the insurance industry. In particular, Platforms’ comparison and recommendation services are likely to have a direct impact on independent general agencies (“GAs”) that hire a large number of sales agents. Moreover, the provision of such services may also intensify price competition among insurers.

The FSC plans to review ways to improve the system by analyzing market effects and the operational progress made during the pilot period and is expected to continue its discussions with the insurance sector and big-tech companies.


[Korean Version]