Lee Bok-hyun, Governor of the Financial Supervisory Service, Holds Meeting with Insurance Company CEOs
"Supervisory and Inspection Capabilities to Focus on Acts Disrupting Market Order"
"Active Support for Insurance Company Management Activities Including Regulatory Relaxation"
Lee Bok-hyun, Governor of the Financial Supervisory Service, met with insurance company CEOs to urge the eradication of unhealthy sales practices in sales channels and the strengthening of internal controls.
On the 27th, Governor Lee held a meeting with the heads of 16 major insurance companies, including the presidents of the Life Insurance Association and the General Insurance Association. This meeting was an opportunity for open communication between the supervisory authorities and the insurance industry to explore healthy development plans for the insurance industry and discuss major issues facing the sector.
Governor Lee emphasized that insurance companies must strengthen internal controls and work to restore consumer trust. He stated, "There is a spread of short-term performance-oriented practices, such as insurance companies neglecting unhealthy sales activities in sales channels like General Agencies (GA)," and urged, "Please make efforts to strengthen internal controls and foster an organizational culture focused on long-term performance, taking this opportunity to implement best practices in accountability structures and executive compensation systems."
He also mentioned that the status of executives and organizations responsible for consumer protection should be elevated so that internal checks and balances can function effectively. Furthermore, he said that supervisory and inspection capabilities would be concentrated on acts that cause consumer harm or disrupt market order due to excessive competition, and that strict accountability would be enforced under a zero-tolerance principle.
Governor Lee also requested efforts to manage financial soundness. He said, "With increased uncertainty in financial markets and declining interest rates, downward pressure on the soundness of insurance companies may increase," adding, "It is necessary to manage risks at an appropriate level through financial impact analysis and to improve the quality of capital by expanding basic capital." He further explained that the supervisory authorities would promote institutional support, such as revising capital regulations, to help insurance companies manage capital adequacy rationally.
He urged faithful implementation of the major tasks for the insurance sector discussed at the Insurance Reform Meeting. Governor Lee said, "The financial authorities plan to expand policy support related to entry into linked industries, overseas market development, and responses to digital, climate, and demographic changes to secure future growth engines for the insurance industry," and added, "The insurance industry should also unite opinions beyond individual interests to develop the insurance industry as a whole."
Governor Lee also stated, "It is evaluated that major accounting issues related to the International Financial Reporting Standards (IFRS17) have been resolved as a result of efforts by the financial authorities and the insurance industry," and said, "We plan to promote an advanced actuarial supervision roadmap going forward, and we ask the insurance industry to cooperate in establishing an effective insurance actuarial assumption management system."
Insurance company CEOs expressed gratitude for the financial authorities' efforts in regulatory rationalization and IFRS17 stabilization. They also agreed on the need to resolve various problems caused by excessive competition or focusing solely on short-term profits within the insurance industry.
Governor Lee also explained the progress on matters proposed at the insurance company CEO meeting held on May 30 last year. He said, "We will thoroughly review the issues proposed at this meeting and reflect them in supervisory and inspection tasks," adding, "We will actively support insurance companies' management activities through regulatory relaxation and improvements."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
