On March 7, the Financial Supervisory Service (“FSS”) held a briefing session and announced some of its focus areas in the insurance sector for 2018. In this newsletter, Yulchon’s Insurance Team would like to recapitulate some of the plans that the FSS announced at the briefing session.
1. Consumer-focused Insurance Supervision
The FSS first emphasized its plan to focus on improving consumer trust in the insurance sector by establishing an advanced recruitment system and fair insurance payment system while strengthening its inspection activities in respect of the consumer protection, especially the insurance products that are closely related to the lives of the consumers. To do so, the FSS said that it would strengthen services for the socially vulnerable people and reorganize the medical expense insurance policy in alignment with the government’s expansion of health insurance coverage.
2. Enhancing Transparency and Fairness of Insurance Industry
The FSS also announced its plan to enhance the transparency and fairness of the insurance industry. To do so, the FSS said that it would improve the disclosure system of insurance products so that the consumers may have better access to insurance products and information. Also, the FSS stated that it would work on enhancing the transparency of the management of insurance companies by examining their governance structure and unfair trade practice with their major shareholders while creating a self-regulated management environment by strengthening the internal control standards of insurance products.
3. Reinforcing Soundness of Insurance Industry
In addition, the FSS said that it would improve the supervisory accounting standards in accordance with the introduction of IFRS 17 and prepare systemically and phased implementation of K-Insurance Capital Standard (K-ICS). Also, the FSS announced its plan to reinforce its inspection activities on the insurance companies for their soundness and manage the debts of the insurance companies to preemptively prevent any potential risks.
4. Creating Infrastructure for Growth of Insurance Industry
To create an infrastructure for growth of insurance industry, the FSS said that it would actively support the development of new insurance products that are linked to the technologies and services of so-called the 4th industrial revolution such as autonomous vehicles and healthcare services. In addition, the FSS also said that it would review the regulatory framework of the industry to alleviate the barriers to the market entry and the establishment of new companies so to promote competition within the market. Last but not least, the FSS also announced its plan to encourage the revitalization of the domestic reinsurance market. To do so, the FSS said it would expand its support for the overseas expansion of domestic reinsurance companies, including its support for the companies’ filing of EU equivalence assessment and the establishment of reinsurance supervisory regulations that satisfy international standards.
At the briefing session, the FSS placed great emphasis on its plan to focus on the consumer protection in carrying out its insurance supervision and inspection activities. Moreover, the FSS underlined its continuous endeavor to achieve sustainable growth of the insurance industry in the midst of the crisis that the insurance industry is currently facing such as low level of trust in the industry, low birth rate and aging, strengthening of international capital regulation, the arrival of the 4th industrial revolution.