No More Arbitrary Insurance Switching by Agents... Establishment of an Insurance Comparison System

Other Insurers' Coverage Information Also Available
Comparison Guide Targets Further Segmented
"We Will Prevent Unfair Transfers"

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The financial authorities are establishing a system that allows verification of insurance contract information from various companies to prevent 'unfair switching,' where existing customers are re-enrolled in the same product with altered coverage and their original contracts are canceled. This system will enable confirmation of similar insurance information already subscribed to at other companies, thereby preventing unfair 'insurance switching.'

On the 23rd, the Financial Services Commission and the Financial Supervisory Service announced plans to build this integrated IT system (tentatively named the 'Comparison Guidance System') and to promote related institutional improvements.

As the insurance market has become saturated, cases of so-called 'upselling' and 'remodeling,' where existing customers are re-enrolled by only changing the coverage of their current products, have increased. Concerns about unfair switching, where important details such as insurance periods and expected interest rates are not properly disclosed while canceling existing contracts and switching policies, have also grown. Although unfair switching has been prohibited since 2003, the comparison guidance was only formal, resulting in little preventive effect.

In response, since March last year, the financial authorities have operated a 'Switching System Improvement Task Force' with the Life Insurance Association, the General Insurance Association, the Korea Insurance Research Institute, the Credit Information Agency, and various insurance companies to develop these institutional improvements.

First, the ‘Comparison Guidance System,’ which allows inquiry of contract information from other insurance companies at the Credit Information Agency, is expected to be established by the end of the year at the earliest. Through this system, insurance agents and others involved in insurance solicitation must check the centralized contract information at the Credit Information Agency before accepting new contracts and provide comparison guidance to customers. The purpose is to prevent customers from suffering losses by canceling existing similar coverage and subscribing to new insurance products.

Overview of Insurance Product Comparison Guidance System (tentative) (Provided by the Financial Services Commission)

Additionally, the scope of similar contracts subject to comparison guidance for switching will be finalized, and related systems will be improved, including enhancements to the comparison guidance confirmation form. Previously, the scope of similar contracts used as criteria for switching was too broad, divided into three groups (life insurance, general insurance, and third insurance). Now, it will be subdivided into ▲life insurance ▲third insurance (three types: disease, injury, nursing care) ▲general insurance (14 types: fire, marine, etc.) ▲savings and pension insurance (two types: savings, pension), clarifying the targets for comparison guidance. Furthermore, the comparison guidance confirmation form will be revised to be easier to understand.

A financial authority official explained, "We will consult with related organizations and insurance associations to ensure the Comparison Guidance System is built smoothly and operates stably in the field, and we will continue to improve the system to reduce consumer damage and inconvenience."