Kim Yongtae, Chairman of the Insurance GA Association: "If Insurers Control GAs, Trade Secrets May Be Leaked"

Kim Yongtae, Chairman of the Insurance General Agency Association, Holds Press Conference on the 14th
"Opposes Third-Party Risk Management Guideline"
"Insurance Sales Commission Reform Plan Also Needs Revision"

Kim Yongtae, chairman of the Insurance General Agency Association, has expressed opposition to the third-party risk management guidelines for insurance companies being promoted by financial supervisory authorities. He also requested a six-month postponement of the implementation of the revised insurance sales commission plan, which is scheduled to take effect in the second half of next year, arguing that it threatens the livelihoods of insurance planners.

At a press conference held on the 14th at the Insurance General Agency Association in Jongno-gu, Seoul, Chairman Kim criticized, "The third-party risk management guideline forces a privately created guideline onto another private company, which is inconsistent with the Constitution, the law, and the principles of a market economy."

The third-party risk management guideline, which the Financial Supervisory Service is working to introduce this year, is a system that requires insurance companies to create and manage evaluation indicators for corporate insurance agencies (GAs) that sell insurance products on consignment. Last month, the Korea Life Insurance Association and the General Insurance Association of Korea released quantitative and qualitative detailed evaluation indicators for the guideline, which is scheduled to be implemented from December 1. The financial authorities plan to impose penalties such as additional capital requirements if insurance companies fail to properly manage GA risks.

Kim Yongtae, chairman of the Insurance GA Association, is speaking at a press conference held at the Insurance GA Association located in Jongno-gu, Seoul on the 14th. Photo by Choi Donghyun

Chairman Kim expressed concern that the implementation of the guideline would infringe on the independence and managerial autonomy of GAs. He said, "Third-party risk management grants insurance companies the authority to request data, conduct audits, and carry out inspections at the level of the Financial Supervisory Service, which could lead to the leakage of GAs' trade secrets in the process." He also pointed out, "There will be significant administrative and personnel costs in responding to data requests and inspections based on different evaluation indicators set by each insurance company."

The Insurance General Agency Association has collected opinions from the GA industry and conveyed concerns regarding the implementation of the guideline to the life and non-life insurance associations. The association plans to strengthen internal controls, such as enhancing industry education, rather than having insurance companies strictly manage GAs through evaluation indicators.

Chairman Kim also voiced opposition to the amendment to the Insurance Business Act supervisory regulations, which the Financial Services Commission pre-announced in June. This amendment focuses on revising insurance sales commissions, including the introduction of a deferred commission payment system, public disclosure of commission comparisons, and the implementation of the 1200% rule. The proposal is currently under review by the Presidential Regulatory Reform Committee.

Chairman Kim argued that the newly established maintenance commission rate under the deferred payment system should be raised to within 1.5% of contract acquisition costs, instead of the proposed 1.2%. He stated, "Insurance planners are representative jobs for ordinary people. If their income drops sharply compared to before, their livelihoods could be at risk, and it will be difficult to create new jobs."

Regarding the 1200% rule, which is scheduled to be introduced in July next year, Chairman Kim requested that its implementation be postponed to January 2027. He explained, "GAs transact with dozens of insurance companies, and each has a different commission contract method. To align all protocols between insurance companies and GAs, we would need to completely rebuild our systems, which requires more time." Chairman Kim also requested the removal of the exception provision for the support cost limit for new planners, arguing that it violates regulatory fairness between insurance companies and GAs.