In the wake of financial regulators’ “Plan to Improve Insurance Regulations,” announced in November 2022, the Enforcement Decree of the Insurance Business Act and the Insurance Business Supervisory Regulations have been amended. The amended regulations became effective on July 1, 2023. The key details of these regulations are summarized in the following paragraphs.
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1. |
Expand Digital and Contactless Methods of Insurance Solicitation |
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Purchasing insurances has become easier with the use of hybrid solicitations, allowing consumers to view product disclosure statements with their smartphones, in addition to telemarketing solicitations.
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Increase Upper Limit of Rebates Provided for Goods that can Mitigate Risks of Insurance Events |
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Although providing special benefits in excess of a certain amount in relation to insurance solicitation was banned, the upper limit of benefits for goods that can mitigate the risk of insurance events has been increased from KRW 30,000 to KRW 200,000 or 10% of the annual premium, whichever is smaller. Accordingly, providing gas leakage and fire detection devices not exceeding the abovementioned upper limit to customers who subscribe to housing fire insurances is now permitted.
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Require Insurers to Disclose Retention Rates of Insurance Contracts |
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The long-term indicator “retention rate of insurance contracts” (e.g., the ratio of the executed insurance contracts that are maintained for one, two, three, and five years) has been added to the “Comparison and Disclosure Standards for Insurance Products” maintained by the Korea Life Insurance Association and the General Insurance Association of Korea, thereby strengthening the provision of information for consumers to choose insurance products.
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Strengthen Insurers’ Obligation to Explain Foreign Exchange Risks Associated with Foreign Currency Insurance Products |
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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.).
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5. |
Relax Obligation of Small Corporate Insurance Agencies to Disclose Management Information |
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Corporate insurance agencies with a solicitation performance of KRW 1 million or less during a half-year period are exempt from the obligation to disclose their management information.
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In the case of corporate insurance agencies with less than 100 insurance solicitors, the upper limit of an administrative fine to be imposed for the violation of the obligation to disclose management information has been lowered from KRW 10 million to KRW 5 million.
Related Topics
#Insurance Regulations #Amendment #Insurance #2023 Issue 3 #Newsletter
