Consumer Protection Must Be Recognized as a Core Management Principle
Emphasis on Reflecting Consumer Protection in KPIs and Strengthening Accountability for Product Review
Need to Prepare for New Regulations Such as K-ICS
On Feb. 26, Financial Supervisory Service Governor Lee Chanjin stressed that, to restore trust in the insurance industry, it is essential to establish a culture that recognizes consumer protection as a core management principle. He also called on the industry to prepare in advance for newly introduced regulations, such as the Korean Insurance Capital Standard (K-ICS, pronounced "Kicks") solvency regime and the new guidelines on loss ratio and expense assumptions.
Lee Chanjin, Governor of the Financial Supervisory Service, is attending a meeting with bank CEOs at the Bank Hall in Jung-gu, Seoul, and is delivering opening remarks. Feb. 12, 2026. Photo by Yoon Dongju
Governor Lee made these remarks at a meeting held that day with the chairmen of the Life Insurance Association and the General Insurance Association and the chief executive officers (CEOs) of 14 major insurance companies, emphasizing that "management must maintain the will and attitude to put 'consumer protection' into practice as the top priority value."
In his opening remarks, he said, "For some products, social welfare is actually declining due to product designs that fail to take into account third-party risks and sales practices that rely on excessively high commissions, which amount to 'self-destructive' competition," adding, "The insurance industry needs not only quantitative growth but also sound, substantive growth based on trust and stability."
He particularly emphasized the need to establish a sound corporate culture that places consumer protection above all else. Governor Lee said, "You should incorporate consumer protection indicators that cover the entire product life cycle into your key performance indicators (KPIs), and link your dispute-reduction strategies to the performance and compensation systems for executives and employees," adding, "You must also strengthen the accountability of product review functions by clearly specifying in the statement of responsibilities the management duties of the chief consumer officer (CCO) and other members of the product committee."
He also said that companies must refrain from excessive competition focused on short-term performance and instead establish sound business practices. He explained that, since the implementation of the new insurance accounting standard (IFRS 17), continued excessive competition in products centered on high commissions has fueled concerns about premium increases and the deterioration of insurers' financial soundness.
In response, the supervisory authorities have finalized a plan to improve the insurance sales commission regime and intend to implement it in stages starting in July this year. However, as the implementation of the new system approaches, concerns are mounting over market disorder, including overheated competition to poach insurance planners and the design of irregular incentive schemes. Critics warn that large-scale movements of planners could lead to improper policy replacements and higher business expenses, resulting in consumer harm.
Governor Lee urged, "The insurance industry should actively participate in establishing sound sales and solicitation practices so that the purpose of the system overhaul, which is to provide stronger protection for consumers, is not undermined." The supervisory authorities also plan to continue identifying and pursuing tasks to protect consumer rights and interests, including strengthening accountability for sales channels such as general agencies (GAs) and reinforcing consumer notification obligations related to insurance benefit payments.
Governor Lee also highlighted the need to expand productive and inclusive finance. He said, "We will actively pursue institutional improvements needed to expand productive finance, such as adjusting risk weights on infrastructure and venture investments," and asked the insurance industry to reasonably improve subscription and underwriting procedures and expand the development of customized products to close coverage gaps for socially vulnerable groups, including seniors, people with disabilities, and low-income or otherwise disadvantaged individuals.
He further emphasized the importance of managing financial soundness. Governor Lee noted, "Financial soundness is not just an accounting metric; it is a core foundation for building market trust in an insurer's ability to honor its contracts," and said that meticulous management is needed for overseas alternative investments, such as private debt funds, where investment risks have not yet fully materialized. He also called on the industry to prepare proactively for the introduction of new prudential supervision regulations, including the basic capital K-ICS regime and the guidelines on loss ratio and expense assumptions.
In response, the insurance company CEOs agreed on the need to restore trust in the insurance industry by establishing a corporate culture that puts consumer protection first. They also stated that, as long-term institutional investors, they would fulfill their social responsibilities by promoting productive finance and expanding inclusive finance.
They additionally requested the authorities' attention and support to ensure that the overhaul of the sales commission regime and the second phase of the digitalization of claims for indemnity health insurance can proceed without disruption.
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