FSS Holds Meeting with Insurance Executives: "Excessive Competition Must Be Curbed"

The Financial Supervisory Service (FSS) announced on the 20th that it held a meeting with the management of 15 major domestic insurance companies.

This meeting was organized to discuss key issues in the insurance sector and share future supervisory directions. Chaired by Lee Se-hoon, Senior Deputy Governor of the FSS, executives from major domestic insurers including the Life Insurance Association, Samsung Life Insurance, Kyobo Life Insurance, Samsung Fire & Marine Insurance, and Hyundai Marine & Fire Insurance attended.

The FSS and insurance sector participants reviewed the progress of issues discussed at the CEO meeting of insurance companies held in December last year and exchanged opinions on major insurance industry issues for this year.

Financial Supervisory Service building.

The FSS urged CEOs and other executives to take a deep interest to prevent the recurrence of unsound business practices that betray consumer trust in pursuit of short-term profits. Due to concerns over unsound solicitation practices (such as improper contract transfers) arising from recent competition to recruit agents and commission-focused recruitment practices, the FSS requested restraint from excessive competition among insurance companies and general agencies (GA).

Regarding unreasonable product development and sales, such as excessively designing coverage limits or emphasizing high refund rates despite being protection-type insurance, the FSS also requested insurers to strengthen their internal controls. This appears to be related to the recent intense competition over refund rates for short-term payment whole life insurance in the life insurance industry.

Furthermore, the FSS warned against some incorrect sales practices that transfer risks to consumers and urged efforts to enhance risk management capabilities, which are fundamental to financial companies, to improve public trust in insurance.

It was also mentioned that thorough risk management and sufficient loss absorption capacity are necessary, keeping in mind various changing circumstances. An FSS official stated, "The insurance industry is at a critical time requiring innovative efforts to find new growth engines in the face of rapidly changing financial environments, domestic and international uncertainties, and growth stagnation. It must move away from sales-driven competition and simultaneously pursue efforts to develop diverse insurance services that meet changing social demands, expand overseas, and pioneer markets through mergers and acquisitions (M&A)."