Financial Supervisory Service Holds Workshop to Strengthen Internal Controls of Large Corporate Insurance Agencies

From June, Industry and TF Formation... Improvement of Internal Control Evaluation Model

Financial Supervisory Service, Yeouido, Seoul. Photo by Younghan Heo younghan@

On the 26th, the Financial Supervisory Service (FSS) announced that it held an 'Internal Control Enhancement Workshop' targeting large corporate General Agencies (GAs).

In this semiannual workshop, topics discussed included ▲ key directions for GA inspections and sanctions ▲ strengthening inspections of illegal activities in sales channels ▲ improvements in the evaluation of internal control operations of large GAs.

The FSS will strengthen inspections concerning consumer damage risks caused by overheated performance competition such as fabricated contracts, incomplete sales, improper policy replacements, and collection transfers. Regular joint inspections between insurance companies and GAs will be institutionalized, and thematic (ad hoc) inspections will also be expanded.

Additionally, to advance the evaluation of internal control operations for large GAs currently in pilot operation, the FSS plans to improve the evaluation model and publicly disclose evaluation results. Starting from June this year, a task force (TF) will be formed with the industry to improve and supplement the evaluation model for internal control operations of large GAs. The pilot application will take place in the second half of the year, with the evaluation manual revised by the end of the year and officially applied from next year's evaluation.

For intentional and organized illegal activities, the highest level of legal sanction standards will be applied in principle. Sanctions will be imposed at the highest legally applicable level, ranging from minimum business suspension to license cancellation, and fines will be imposed at the maximum legal limit without reduction. However, if violations are corrected during the voluntary correction period from May to July and self-discipline is implemented, fines may be reduced and measures will be taken at the previous level.

An FSS official stated, "As the influence of GAs in the insurance sales market gradually expands, we will continue to support the establishment of a corresponding internal control system," adding, "In a situation where issues related to solicitation order such as fabricated contracts and short-term payment whole life insurance illegal sales continue to arise, we hope this serves as an opportunity to reaffirm the importance and necessity of strengthening internal controls."