70% of Insurers and GAs Appoint 'Sanctioned Agents'... Financial Supervisory Service to Establish Guidelines in April

71 Out of 105 Entities Appointed Sanctioned Planners
69 Out of 71 Provided No Follow-up Management
"Guidelines to Encourage Disclosure of Insurance Business Act Violations and Disciplinary Records"

It has been revealed that 7 out of 10 insurance companies and corporate insurance agencies (GAs) appointed planners with a history of sanctions. Financial supervisory authorities plan to prepare guidelines next month and reflect them in the evaluation of the 'Third-Party Risk Management Guidelines for Insurance Companies,' which will be established in the first half of the year.

Seoul Yeouido Financial Supervisory Service Headquarters exterior. Provided by FSS

On the 26th, the Financial Supervisory Service (FSS) announced that a survey of 105 entities, including 32 insurance companies and 73 large GAs, found that 71 (68%) had appointed planners with a history of sanctions.

The FSS explained that the survey was conducted because many cases were found where planners with sanction histories moved to other companies and repeatedly committed similar violations.

According to the FSS's investigation into the control status of planner appointments at 105 entities, 98 (93%) responded that they check planners' sanction histories through the e-Clean Insurance Service. The use of other important indicators such as insurance fraud disciplinary records and contract retention rates was found to be low.

Among the 98 entities, 93 (95%) had formalized the use of the e-Clean Insurance Service in their internal regulations. However, some companies operated these regulations only as simple manuals, showing weak formalization, or had formal but inadequate regulations. There were even companies with only three clauses in their regulations.

Out of the 105 entities, 32 (31%) did not appoint planners with sanction histories. Among the 71 entities that did appoint such planners, 28 (39%) responded that they do not appoint planners with sanction histories within a certain period (2 to 5 years). Among the 71, 43 (61%) said they appoint planners with sanction histories only after special approval from the CEO, head of sales division, or branch manager.

An FSS official said, "A considerable number of GAs grant special approvals mainly through sales managers without the participation of internal control officers, making it difficult to guarantee the appropriateness of appointing planners with sanction histories."

Most companies that appointed planners with sanction histories did not conduct follow-up management. Among the 71 entities, 69 (97%) said they do not perform separate management after appointment. Two companies conducted thorough reviews of all contracts within three months of appointment or separately managed planners with special approval.

The FSS plans to guide companies to operate and formalize guidelines for the planner appointment process. Related guidelines will be prepared this month in cooperation with life insurance, non-life insurance, and GA associations.

The guidelines will include important matters and related procedures at the time of appointment. Insurance companies and GAs will be required to present essential consideration items such as violations of the Insurance Business Act and disciplinary histories of appointed planners.

For planners with special issues, the guidelines will strengthen follow-up management, such as enhanced suitability reviews and coverage limit restrictions. The appointment process will be formalized with procedures, essential considerations, and consumer damage prevention measures, and reported to management and the board of directors.

The contents related to the planner appointment guidelines will be reflected in the evaluation items of the 'Third-Party Risk Management Guidelines,' which will be established in the first half of the year. These guidelines aim to encourage insurance companies to develop strategies to control and mitigate sales consignment risks arising from entrusting GAs with product sales.

An FSS official stated, "In the future, supervisory authorities will take swift and strict actions based on a zero-tolerance principle against illegal acts by planners, such as fraudulent solicitations, and will strive to ensure that those involved receive penalties commensurate with consumer damages to prevent recurrence of similar cases."