Rich&Co, What on Earth Happened to the Once Thriving Company?

Financial Supervisory Service Inspection and Police Search and Seizure

[Asia Economy Reporter Oh Hyung-gil] The large corporate agency (GA) Rich & Co is drawing attention as it is currently under inspection by the Financial Supervisory Service and has also undergone a police raid.

According to the insurance industry and legal circles on the 17th, Rich & Co is currently undergoing a partial inspection by the Financial Supervisory Service. The authorities began partial inspections of Rich & Co and Kiwoom Asset Planner in July. The inspection, which had been temporarily suspended due to the spread of COVID-19, has recently resumed.

The authorities are reportedly planning to investigate whether there were any illegal activities during their insurance sales process using cable broadcasting and other methods. The concern is that under the pretext of insurance consultation, they obtain contract information by offering to remodel the insurance policies consumers have subscribed to, and induce new insurance subscriptions, which could lead to the proliferation of replacement contracts.

It is expected that there will be a focused inspection on whether improper replacement contracts were made during the recruitment process. Replacement contracts, where existing contracts are canceled and new contracts are signed, can cause consumers to suffer losses such as receiving refunds less than the premiums paid or having reduced coverage. The key issue is whether consumers were properly informed about the financial losses caused by mid-term cancellations and whether there were any suspicions of incomplete sales. The Financial Supervisory Service announced in this year’s insurance inspection work plan that it would examine the sales process related to insurance broadcasting.

In January, Rich & Co was fined 100 million KRW by the authorities for violating the Insurance Business Act, including cases where affiliated insurance planners signed contracts without obtaining the contract holders’ signatures and instead signed on their behalf.

Recently, the police also conducted a raid on Rich & Co’s headquarters. During an investigation into allegations of violations of the Political Funds Act involving Yang Hang-ja, an independent lawmaker’s former special aide, the police believe that former Rich & Co CEO Han Seung-pyo provided monthly activity funds amounting to several million KRW.

On the 6th, Rich & Co appointed Vice President Gong Tae-sik as CEO. Former CEO Han stepped down to become chairman of the board. It is also reported that a complaint has been filed alleging breach of trust, claiming that Han provided preferential treatment such as advisory or service contracts to family and acquaintances.

As of June, Rich & Co has 3,986 affiliated planners, ranking 12th in the GA industry. Last year, it recorded sales of 331.1 billion KRW and operating profit of 11.3 billion KRW. Having launched the insurance management application ‘Good Rich,’ it has been recognized as a leading ‘InsurTech’ company (a combination of insurance and technology).