[Big Tech Enters Insurance] Naver-Originated Commission Conflict... Online Platform Insurance Service Regulations to Be Introduced

<Part 2> Naver Insurance Premium Comparison Service... Advertisement or Insurance Sales?
Conflict with Insurers over Commissions
Car Insurance Premium Comparison Service Canceled

Authorities Preparing Supervision System
Broad Application of Insurance Sales Overseas

[Editor's Note] The insurance invasion by big tech (large information and communication companies) has begun. They dream of expanding the success story achieved in internet-only banks, based on large platforms familiar to the MZ generation (Millennials + Generation Z), into insurance. Kakao has launched a digital non-life insurance company and is directly selling insurance, while Naver is building a comprehensive financial platform starting with partnerships in the insurance sector through insurance comparison services. The emergence of powerful competitors signals a wave of change in the traditionally conservative insurance industry. The industry is responding swiftly by accelerating digital innovation based on insurance expertise. This article focuses on diagnosing the future of insurance through the strategies and prospects of big tech's entry into the insurance market.

[Asia Economy Reporter Oh Hyung-gil] Last July, Naver Financial attempted to launch a car insurance premium comparison service but failed due to commission conflicts with non-life insurance companies. The perspectives of insurance companies and ICT firms on services and commissions differed. The problem arose because it was unclear whether the service providing insurance information was advertising or an insurance sales act.

The financial authorities plan to define the nature of insurance services provided on online platforms and establish a supervisory framework. This is interpreted as a determination to establish a regulatory system for platform insurance services and ensure fair competition, as seen in the conflict between Naver and non-life insurers.

According to the insurance industry on the 9th, the Financial Services Commission plans to establish regulatory standards by the end of this month based on service types such as insurance premium comparison, platform insurance subscription, and coverage analysis on online platforms. Currently, online platforms like Naver Financial or Kakao Bank face restrictions on registering as agencies, so they recruit insurance indirectly through subsidiaries or operate limited services in the form of advertisements.

In particular, for car insurance, not only direct channels operated by non-life insurers but also corporate agencies (GA) run comparison quote sites, resulting in a proliferation of similar services. Additionally, the online insurance supermarket 'Boheom Damoa,' jointly operated by the Life and Non-Life Insurance Associations, offers various comparison services.

The insurance industry is closely watching the Financial Services Commission's authoritative interpretation on whether the car insurance premium comparison service that Naver Financial intends to introduce constitutes solicitation or advertising. This reflects the industry's caution regarding Naver's influence.

Naver Financial initially planned a business model that partnered with non-life insurers to compare the car insurance premiums they provide and offer them to consumers, receiving commissions (advertising fees) from insurers. This was essentially the same method as existing online shopping mall price comparison and search services.

However, if the comparison service links directly to the insurer's site, it could be considered insurance sales rather than advertising. Under the current Insurance Business Act, insurance sales are limited to qualified insurance company employees, insurance planners, insurance agencies, and insurance brokers. Naver Financial established 'NF Insurance Service,' a GA, to address this issue.

If recognized as insurance sales and commissions are received, another problem arises: loss of price competitiveness. Currently, online car insurance is cheaper than other channels because there are no solicitation commissions. From the non-life insurers' perspective, paying solicitation commissions to Naver Financial (NF Insurance Service) would ultimately lead to premium increases.

Overseas, insurance sales are broadly regulated. The European Union (EU) clarified in its 2018 Insurance Distribution Directive that providing insurance product information or price comparisons via the internet constitutes 'insurance sales.' Activities such as providing links to insurers or insurance sellers on price comparison sites or actively comparing features or conditions of multiple insurance contracts are regulated.

The financial authorities plan to establish standards by referencing regulatory frameworks from the EU, the United States, Japan, and others. They also intend to improve regulations unsuitable for platforms. For example, the regulation requiring that more than 10% of insurance agency employees maintain insurance planner qualifications will be revised as big tech companies are allowed to enter as insurance agencies.

An insurance industry official said, "The car insurance premium comparison service is a market not only eyed by Naver but also by many other companies," adding, "Depending on the Financial Services Commission's authoritative interpretation, changes in the overall car insurance sales methods are expected."

Last July, Naver Financial attempted to launch a car insurance premium comparison service but failed due to commission conflicts with non-life insurers. The perspectives of insurance companies and ICT firms on services and commissions differed. The problem arose because it was unclear whether the service providing insurance information was advertising or an insurance sales act. In response, the financial authorities plan to define the nature of insurance services provided on online platforms and establish a supervisory framework.