Meetings with CEOs of Insurance, Savings Banks, and Card Companies Scheduled for September
Messages Expected on Strengthening Consumer Protection and Promoting Mutually Beneficial Finance
Lee Chanjin, the newly appointed Governor of the Financial Supervisory Service, will begin a series of meetings with CEOs in the secondary financial sector, starting with the insurance industry on September 1 and continuing through mid-September to include card companies and savings banks. As Governor Lee has been reserved in his remarks since taking office but has delivered pointed messages, attention is focused on what message he will deliver to the secondary financial sector.
According to the financial sector on September 1, Governor Lee will meet with CEOs of life and non-life insurance companies at the Center Point Gwanghwamun building in Jongno-gu, Seoul, at 3 p.m. that day. Eight life insurance companies, including Samsung Life Insurance, Hanwha Life Insurance, Kyobo Life Insurance, Shinhan Life Insurance, NH Nonghyup Life Insurance, Mirae Asset Life Insurance, MetLife Insurance, and DB Life Insurance, as well as eight non-life insurance companies, including Samsung Fire & Marine Insurance and Hyundai Marine & Fire Insurance, will attend. Kim Cheolju, Chairman of the Korea Life Insurance Association, and Lee Byungrae, Chairman of the General Insurance Association of Korea, will also be present.
Lee Chanjin, Governor of the Financial Supervisory Service, is delivering opening remarks at the banking sector meeting held at the Bankers' Hall in Jung-gu, Seoul on the 28th of last month. Photo by Kang Jinhyung
Governor Lee is expected to urge insurance company CEOs to strengthen consumer protection. He expressed his commitment to enhancing consumer protection at his inauguration ceremony on August 14 and at the banking sector meeting on August 28. Since the insurance industry receives the highest number of consumer complaints and disputes among financial sectors, he is likely to call for more thorough consumer protection measures.
Attention is also focused on whether he will address the topic of mutually beneficial finance. At the banking sector meeting, Governor Lee criticized banks for focusing on easy interest profits and announced plans to conduct a fact-finding review to expand financial support for small and medium-sized enterprises and small business owners. With some major insurers recently raising long-term insurance premiums by 5% to 10% by lowering the assumed interest rate, he may also call for restraint in premium hikes.
There is also a possibility that he will comment on the accounting treatment of affiliate shares by Samsung Life Insurance. On August 21, the Financial Supervisory Service held a closed-door meeting on this issue, inviting the four major accounting firms (Samil, Samjeong, Anjin, Hanyoung), the Korea Accounting Standards Board, civic groups, and experts. As this was Governor Lee's first major agenda after taking office, it drew significant attention from the insurance industry. Governor Lee, who previously worked with the People's Solidarity for Participatory Democracy, has a history of strongly criticizing the merger between Samsung C&T and Cheil Industries.
As this will be the first formal meeting, insurance company CEOs are expected to briefly share industry issues and request necessary regulatory improvements. The most pressing issue in the insurance industry recently has been capital expansion. Insurers with weak financial soundness are raising capital through hybrid securities and paid-in capital increases to defend their risk-based capital ratio (K-ICS) and prepare for the 'basic capital K-ICS' regulation. There is a high likelihood that they will call for regulatory improvements to ease financial burdens. They are also expected to voice concerns that the government's proposed increase in the education tax rate (from 0.5% to 1%) would be a financial burden.
Insurance companies are also expected to emphasize their active participation in mutually beneficial finance. On August 26, the Financial Services Commission announced that it would work with eight insurance companies to establish a 30 billion won win-win fund to support insurance premiums for small business recovery and overcoming low birth rates. Major non-life insurers operating automobile insurance have also participated in the government's mutually beneficial finance initiative by lowering premiums for four consecutive years.
Governor Lee is also expected to reiterate the importance of consumer protection and mutually beneficial finance to the card industry. The card industry is closely related not only to consumers but also to the livelihoods of small business owners and the self-employed. Governor Lee is expected to ask CEOs of card companies supporting the Lee Jaemyung administration's 'Livelihood Recovery Consumption Coupon' policy to thoroughly prepare for the second round of applications, which begins on September 22, to ensure a smooth process.
Card company CEOs are expected to express difficulties stemming from reduced competitiveness in their core business, as they have been unable to increase card loans due to the government's strengthened household loan regulations since last month, in addition to the merchant fee reductions that have continued for 13 years.
For the savings bank sector, Governor Lee is expected to urge them to expand financial services for low- and medium-credit borrowers. He is also likely to call for speeding up the sale of real estate project financing (PF) bonds. Savings bank CEOs are expected to request further regulatory easing related to mergers and acquisitions (M&A) and the long-standing industry demand for easing regulations on business areas.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
