"Financial Supervisory Service Holds GA Internal Control Workshop to Eradicate CEO Insurance Rebates"

On the 26th, the Financial Supervisory Service (FSS) announced that it held an 'Internal Control Enhancement Workshop' targeting large corporate General Agencies (GAs). Approximately 70 compliance officers from large GAs with over 1,000 planners attended the biannual workshop.

During the event, the FSS urged the establishment of internal controls to prevent consumer harm amid intensifying excessive competition among GAs. It specifically pointed out that some planners who received large settlement bonuses neglected to properly compare and inform important details between existing and new contracts under performance pressure, resulting in the unjust termination of existing contracts. Additionally, the FSS detected illegal rebates and incomplete sales during the sale of CEO insurance and emphasized eradicating four major illegal activities: ▲fabricated contracts (false or processed contracts), ▲unfair contract transfers, ▲intermediary contracts and improper commission payments, and ▲provision of special benefits.

Furthermore, the FSS shared the 2023 internal control operation evaluation results for large GAs and provided guidance on future inspection plans and evaluation model improvements. The average grade of the 69 evaluated companies was Grade 3 (70 points), the same as in 2022, with 42 companies (60.9%) rated between Grades 1 and 3, and 27 companies (39.1%) rated between Grades 4 and 5. The FSS plans to conduct thematic internal control inspections on GAs with insufficient improvement performance among those rated Grades 4 and 5 and prioritize them when selecting targets for regular and ad hoc inspections. Additionally, after completing the evaluation model improvements by the end of this year, the FSS intends to establish a system to disclose evaluation results so that consumers and insurers can recognize and utilize the internal control levels of GAs.

Other topics discussed included ▲concerns over unsound business practices linked to quasi-deposit activities, ▲fraudulent acts in planner qualification exams, ▲false or exaggerated advertising of insurance products, ▲false or exaggerated advertising in planner recruitment, and ▲insufficient results from the compliance officers' council self-inspections.

An FSS official stated, "In a situation where issues related to recruitment order, such as excessive settlement bonuses or incomplete sales of CEO insurance, continue to arise, this workshop served as an opportunity to reaffirm the importance and necessity of strengthening internal controls. We will maintain close communication with the GA industry through various channels such as workshops and meetings, and as the influence of GAs in the insurance sales market gradually expands, we will continue to support the establishment of corresponding internal control systems."