Following the financial authorities’ “Plan to Improve Insurance Regulations,” which was announced in November 2022, the Enforcement Decree of the Insurance Business Act and the Insurance Business Supervisory Regulations have been amended. The newly amended regulations are set to come into force in the second half of 2023. Key details of these regulations are summarized as follows:

1.   Expand the Permissible Methods of Insurance Solicitation
 

• Permit hybrid solicitations, in addition to telemarketing solicitations, allowing consumers to view product disclosure statements displayed on their smartphone screens while listening to a voice explanation.

• Permit solicitations conducted over video call, allowing consumers to purchase insurances after listening to an insurance agent’s explanation via video call.
   

2.   Increase the Upper Limit of Rebates Provided for Goods that can Mitigate the Risk of Insurance Events
 

• Currently, a rebate of up to KRW 30,000 can be offered at the time of executing or soliciting an insurance contract. However, the upper limit of goods that can mitigate the risk of insurance events (e.g., gas leakage detection device) will be increased to KRW 200,000 or 10% of the annual premium, whichever is smaller.
   

3.   Require Insurers to Disclose Persistency Rates of Insurance Contracts
 

• The requirement of disclosing “persistency rates of insurance contracts” has been newly added to the “Comparison and Disclosure Standards for Insurance Products” maintained by the Korea Life and Non-life Insurance Associations.
   

4.   Strengthen the Obligation of Insurers to Explain Foreign Exchange Risks Associated with Foreign Currency Insurance Products
 

• When selling foreign currency insurance products, insurers are required to explain the risk of fluctuations posed by changing exchange rates (e.g., risk of fluctuations in premium, insurance proceeds, surrender value, etc.).
   

These amended regulations are scheduled to come into force on July 1, 2023, except for the solicitations over video calls, which will be permitted from July 6, 2023.