FSS Senior Deputy Governor: "Insurance Agency Internal Control Capabilities Must Be Strengthened"

Meeting Held with Major GA Representatives
GA Representatives Request Eased Sanctions on Self-Addressed Violations

Lee Se-hoon, Senior Deputy Governor of the Financial Supervisory Service (FSS), met with representatives of nine major corporate General Agencies (GAs) on the 2nd and urged them to strengthen their internal control capabilities. He also asked them to exercise caution when appointing planners involved in illegal activities.

Sehun Lee, Senior Deputy Governor of the Financial Supervisory Service, announced the dispute mediation guidelines related to the large-scale losses of the Hong Kong H Index-linked ELS at the Financial Supervisory Service in Yeouido, Seoul, on the 11th of last month. Photo by Jinhyung Kang aymsdream@

On the same day, Lee held a GA representatives meeting at the Life Insurance Education and Culture Center in Jongno-gu, Seoul. The meeting was attended by Kim Yong-tae, Chairman of the Insurance GA Association, as well as representatives from nine major GAs including Hanwha Life Financial Services, Inka Financial Services, GA Korea, and Global Financial Sales. This was the first time a senior deputy governor of the FSS held a meeting with GA representatives.

Lee urged the GA representatives to enhance their internal control capabilities, establish a fair competitive order, and focus their sales activities on protecting the rights and interests of insurance consumers.

He pointed out that incidents and accidents exposing weaknesses in GA internal controls continue to occur. Large-scale false and fabricated contracts led by branch managers are still being detected. Some planners affiliated with GAs who were involved in fraudulent fundraising activities have moved to other GAs without significant restrictions.

He stated, "As GAs have grown, it is time to excise the problematic parts and fully establish an internal control system that matches their elevated status."

He emphasized the need to establish a fair competitive order, as excessive competition to scout planners and the movement of planners involved in illegal activities are widespread.

Lee said, "In particular, since planners involved in illegal activities moving to other companies pose a significant risk of corrupting insurance sales, it is necessary to be cautious when appointing them," and added, "I hope that mega GAs and the association will take the lead in self-regulation efforts within the GA industry."

Earlier, the FSS revealed on the 26th of last month that a survey of 105 entities, including 32 insurance companies and 73 large GAs, showed that 71 (68%) had appointed planners with disciplinary records. Among those 71, 43 (61%) responded that they appoint such planners only after special approval from CEOs, sales headquarters heads, or branch managers.

Lee urged GA representatives to prioritize the rights and interests of insurance consumers in their decision-making. He pointed out issues such as the concentration of sales of parent company products by subsidiary GAs and the practice of emphasizing "tax-saving effects" during the sale of management recognition insurance to individuals for whom tax savings are irrelevant.

While GAs agreed on the necessity of establishing internal control systems, they requested the FSS to ease sanctions. They asked for incentives such as relaxed inspection cycles for GAs with excellent internal controls. They also requested the FSS to ease sanctions on violations detected and addressed by the GAs themselves.

They expressed hope that strict measures such as cancellation of registration for planners involved in illegal activities would be enforced to help establish a sound market order.

An FSS official stated, "Going forward, the FSS plans to maintain close communication with the GA industry through various channels such as meetings and internal control workshops."