On February 27, Lee Bok-hyun, the governor of South Korea’s Financial Supervisory Service (FSS), met with the chief executive officers (CEOs) of the country’s major insurance companies. The meeting centered on addressing concerns about industry practices, particularly a growing emphasis on short-term performance, and its potential impact on consumers and market stability.
During the meeting, held at the Life Insurance Education and Culture Center in Seoul, Governor Lee emphasized the need for the insurance sector to prioritize consumer welfare and maintain a healthy market order. He directly addressed the CEOs of the life and non-life insurance associations, as well as representatives from 16 major companies. “Strict accountability will be enforced for any actions that cause consumer harm or disrupt market order due to excessive competition,” Lee stated.
Lee highlighted that insurance companies are increasingly neglecting sound sales practices in distribution channels. This specifically includes corporate insurance agents (GAs). He urged the CEOs to foster a long-term performance-oriented culture. This includes implementing best practices for responsibility structures and executive compensation.
Attendees included Kim Cheol-joo, chairman of the Korea Life Insurance Association, and Lee Byung-rae, chairman of the General Insurance Association of Korea. CEOs from a range of companies were also present: Hanwha Life, Kyobo Life, and Samsung Life, as well as Samsung Fire & Marine, DB Insurance, and Meritz Fire & Marine.
Governor Lee stressed the importance of elevating the status of executives and organizations responsible for consumer protection. “The financial authorities will focus their supervisory and inspection capabilities on actions that cause consumer harm or disrupt market order due to excessive competition and will hold parties strictly accountable under a zero-tolerance policy,” he said.
Furthermore, Lee acknowledged concerns related to wider financial market conditions. He noted that the “increasing uncertainty in the financial market and declining interest rates may exert downward pressure on the soundness of insurance companies.” He therefore advised the companies to manage risks appropriately through financial impact analysis. He also encouraged the enhancement of capital quality through basic capital expansion.
The FSS also announced institutional support measures, including potential revisions to capital regulations. This is designed to help insurance companies manage their capital adequacy effectively. Industry participants requested support for implementing the announced responsibility structures. They also proposed easing regulations on ancillary businesses and subsidiaries.
Additionally, the participants proposed that measures from the Insurance Reform Conference be put into effect without delay. This includes plans for reforming indemnity insurance.
