SOUTH KOREA: REGULATORS TO CLAMP DOWN ON INSURANCE AGENCIES
Source: Asia Insurance Review, 23 June 2014
Financial regulators will tighten controls on the country's 30,000 insurance agencies to protect customers from unfair sales practices such as the provision of misleading information. The Financial Supervisory Service (FSS) and Financial Services Commission (FSC) said that they will hold insurance agencies more liable for damage to customers caused by improper sales, reported the Korea Times. Also, the regulators are considering a plan to force agencies with more than 100 salespeople to register with the Insurance Agency Association to tighten supervision of their operations. The agencies partner with various insurers to sell their products. They are gaining popularity in South Korea as through them, customers can compare the benefits of the products from various insurance firms. Currently, about 30,000 agencies operate nationwide and their influence has been growing in recent years. The agencies, first introduced in 2000, have steadily grown, and now contribute 20% of total sales in the industry. More than 40% of non-life insurance policies are sold by agencies, according to the regulators. In particular, small insurance companies rely heavily on the agencies. However, as the number of agencies has been on the rise, only 40 agencies or so have 500 salespeople or more, while the rest of them have fewer than 100 financial planners. Small-sized agencies are ill-prepared for educating their financial planners about customer service with the result that the planners sold products to customers without providing the latter with due information.