Assemblyman Lee Jung-moon Proposes 'Mandatory Insurance Premium Card Payment' Bill
"A Public Welfare Bill Enhancing Consumer Convenience"
"Insurance Companies Penalized for Refusing Card Payment of Premiums"
The first amendment to the Insurance Business Act in the 22nd National Assembly has been proposed to 'mandate insurance premium payments by card.' This bill has been burdensome for the insurance industry due to increased costs. Since the opposition party is pushing it as a public welfare bill to increase consumer benefits, there is keen interest in whether it will pass in this National Assembly.
According to the National Assembly Bill Information System on the 17th, on the 13th, Lee Jeong-moon, a member of the Democratic Party of Korea, officially proposed an amendment to the Insurance Business Act to allow insurance premiums to be paid by credit, debit, or prepaid cards. The Democratic Party plans to pass the mandatory card payment of insurance premiums as a public welfare bill within this National Assembly.
There have been many consumer demands to allow insurance premiums to be paid by card. However, insurance companies have opposed this due to the approximately 2% card fees they must bear. In the first quarter of this year, out of the total insurance premiums collected by insurance companies amounting to 46.7506 trillion KRW, 7.7579 trillion KRW was paid by card, accounting for about 17%. In the case of life insurance companies, out of total premiums of 24.4152 trillion KRW, only 936.3 billion KRW (3.8%) was paid by card. Life insurance companies are reluctant to accept card payments because life insurance policies have long maturities and large amounts.
Currently, among life insurance companies, Samsung Life Insurance only allows Samsung Card payments for pure protection products. Hanwha Life Insurance and Kyobo Life Insurance do not accept card payments at all. For non-life insurance companies, except for automobile insurance, the proportion of card payments is small. As of the first quarter of this year, the card payment ratio for long-term protection insurance by non-life insurers was 16%, and for long-term savings insurance, it was only in the 3% range.
The bill mandating card payment of insurance premiums was also proposed in the 20th and 21st National Assemblies but was discarded each time. As consumer complaints requesting card payment acceptance increased, financial authorities have been promoting card payment activation since 2018 by publicly disclosing card payment indices by insurance company through each insurance association. However, insurance companies oppose participation, stating that card fees must drop to at least the 1% range.
The card industry argues that a 1% fee is at cost level and absolutely will not accept it. They also claim that setting a separate fee rate only for insurance companies is unfair. Under current law, small and medium-sized enterprises pay card fees set by the Financial Services Commission. However, companies with annual sales above a certain amount, like insurance companies, are not allowed by card companies to have fees set below cost.
This amendment further strengthens regulations by introducing provisions to punish insurance companies that refuse card payment of premiums. A representative from Lee Jeong-moon’s office explained, "Restrictions by insurance companies on card payments limit consumer rights and discriminate against card users. We will enhance consumer payment convenience by establishing separate penalties for insurance companies that refuse or disadvantage card payers." However, a representative from a life insurance company said, "If card payment becomes mandatory, operating expenses will rise, inevitably increasing the premiums customers pay. Ultimately, this benefits card companies while reducing customer convenience."
Meanwhile, in the 21st National Assembly, a total of 65 amendments to the Insurance Business Act were proposed, of which 26 (40%) were processed.
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