FSS "Strict Measures on Excessive Competition Among Insurers"... Strengthening Internal Controls

Expansion of Joint Inspections Between Insurance Companies and Corporate Insurance Agencies
Focusing Inspection Capabilities on Illegal Activities in Product Development and Sales Channels

The Financial Supervisory Service (FSS) has announced plans to focus its inspection capabilities on illegal activities related to product development and sales channels by expanding joint inspections of insurance companies and General Agencies (GAs) amid the intensifying excessive competition in the insurance industry.

On the 29th, the FSS held the "2024 First Half Internal Control Workshop" attended by over 80 insurance company audit officers to communicate this policy.

During regular inspections of insurance companies, the FSS plans to conduct simultaneous inspections not only of subsidiary GAs but also of large GAs with significant recruitment performance related to the insurance companies under regular inspection.

The FSS intends to take strict measures against insurance companies that, despite the anticipated risk of incomplete sales, are engrossed in short-term performance, thereby fueling excessive competition such as cutthroat competition or unreasonable product development.

Additionally, as the importance of strengthening risk management for high-risk assets such as real estate project financing (PF), overseas commercial real estate, and alternative investment assets has increased recently, the FSS will examine whether internal controls are effectively operating throughout the entire investment process, including setting and allocation of investment limits, investment review, and periodic analysis of risk factors.

Insurance companies that neglect investment risk management, such as failing to properly implement the model guidelines for alternative investment risk management while focusing solely on profitability, will face strict measures.

Furthermore, with the amended Governance Act, which stipulates the introduction of a duty structure and the imposition of internal control management obligations, set to be enforced from July, discussions were held on necessary improvements to help insurance companies prepare for the changing regulatory environment.