FSC Revises 'Standard Information Provision Consent Form' to Revitalize Retrocession Market

Insurers Diversify Risks
Enhancing Stability of Insurance Payouts

The Financial Services Commission announced on January 11 that it has revised the standard information provision consent form to promote the revitalization of the insurance and retrocession industries.

A retrocession contract is an agreement in which a reinsurer transfers part or all of the risks it has assumed from a primary insurer to another insurer (retrocessionaire) in order to manage those risks more stably. For this, separate consent from the policyholder for the provision of information for retrocession contracts is required. However, since it has been difficult for reinsurers to obtain information provision consent directly from policyholders, the retrocession market has not been fully activated.

In response, the Financial Services Commission and the Financial Supervisory Service have allowed primary insurers to obtain information provision consent from policyholders on behalf of reinsurers for retrocession purposes. Based on this, the Korea Life Insurance Association and the General Insurance Association of Korea have revised the standard information provision consent form.

According to the revised standard consent form, primary insurers can now obtain information provision consent from policyholders for retrocession contracts on behalf of reinsurers. The purpose of use for the information recipient as stated in the standard consent form is strictly limited to "reinsurance or retrocession contract subscription," so reinsurers may use policyholder information only for purposes related to underwriting or entering into retrocession contracts. The use of such information for marketing, promotion, or any other purposes is strictly prohibited.

If the retrocessionaire is an overseas reinsurer, information may be transferred abroad as part of the (re)insurance contract. In such cases, policyholders can directly verify the overseas reinsurers and their countries of location that may receive their information through the insurer’s website address provided in the standard consent form.

With the revision of the standard information provision consent form, the revitalization of retrocession contracts is expected to help insurers diversify their risks and further strengthen the stability of policyholder claim payments. An official from the Financial Services Commission stated, "The risk-bearing capacity of domestic insurers will be enhanced," and added, "The revised standard consent form will be gradually implemented during the first quarter of this year as each insurer updates its IT systems."