FSS Holds First Half Internal Control Workshop for Insurance Companies

Request for Strengthened Internal Controls
in Response to Personal Information Leaks

The Financial Supervisory Service (FSS) announced on June 27 that it held the "2025 First Half Internal Control Workshop for Insurance Companies."

Since 2015, the FSS has been holding internal control workshops on a semiannual basis to enhance the self-audit capabilities of insurance companies. This workshop was attended by approximately 80 audit officers from insurance companies.

At the workshop, the FSS called on insurance companies to strengthen their internal controls on security in response to recent incidents involving personal (credit) information breaches (hacking) at some corporate insurance agencies (GAs). The FSS also emphasized the responsibilities and roles of insurance companies regarding recent supervisory issues, such as improvements to the insurance product supervision system and risk management measures for insurance companies' delegation of sales to GAs.

The FSS urged insurance companies to self-inspect their compliance with relevant laws, such as the Credit Information Act, and to address any security vulnerabilities. The FSS also requested that companies implement measures such as strengthening identity verification to prevent secondary damage to consumers from the use of leaked personal information.

Recently, concerns have been raised in the insurance industry about consumer harm and market disorder caused by excessive competition focused on short-term results, including unreasonable product development and misselling. In response, the FSS has instructed insurance companies to improve their policy review systems, for example, by disclosing past product review results to the public, to prevent the development of unreasonable products. The FSS also asked insurance companies to work on enhancing the effectiveness of their product committees and to raise the level of internal control and management accountability.

Although GAs are major insurance sales channels, concerns over consumer harm from misselling persist due to relatively weak internal controls at GAs and inadequate oversight by insurance companies. Accordingly, the FSS is currently working on establishing "Guidelines for Third-Party Risk Management by Insurance Companies" to help insurers systematically manage the risks associated with delegating sales to GAs.

The FSS plans to continue efforts to establish proper solicitation practices and prevent unsound business activities, including the introduction of a GA operational risk assessment system. The FSS requested that insurance companies fully manage the risks associated with delegating sales to GAs and fulfill their responsibilities and roles.

The FSS also requested that insurance companies work to establish and operate effective internal control systems, including explaining major internal control weaknesses identified during the internal audit council review process. The FSS stressed that unfair denial of insurance claims is an act of ignoring consumer suffering and emphasized the need for continuous inspection and improvement of related systems and business processes to prevent consumer harm.

An FSS official stated, "Going forward, the FSS will actively communicate with the insurance industry and discuss key issues through various channels, including workshops and meetings," adding, "We will provide active support to help insurance companies strengthen their internal control capabilities for consumer protection and the sound growth of the insurance industry."