Insurance agency representatives also have a 1200% limit on first-year commissions.

Maintenance and Management Fees to be Paid Over 7 Years… Strengthened Contract Management
Advance Commission Payments for Sales to be Limited to Contract Costs
Final Decision to be Made After Gathering Opinions from Planners and GAs in Q1 Next Year, “In the future, the ‘1200% rule’ (limiting the commission paid to planners during the first year to within 12 months of premium) will also be applied to GAs when they pay their affiliated planners. The maintenance and management fees that insurance companies pay to sales channels will be split over 3 to 7 years, and product-specific contract management costs, which can be autonomously set by insurance companies, cannot be used as upfront commission resources.”,
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, On September 16, Kim So-young, Vice Chairman of the Financial Services Commission, held the 5th Insurance Reform Meeting at the Government Complex in Jongno, Seoul, discussing the direction for reforming insurance sales commissions, plans for long-term care insurance, and suggestions for future tasks with related academic and research institutions, insurance companies, and associations.
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, “On the 16th, at the ‘5th Insurance Reform Meeting’ led by Vice Chairman Kim So-young, the Financial Services Commission and the Financial Supervisory Service discussed these reform directions for insurance sales commissions.”
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, “The financial authorities have mandated that the 1200% rule be applied even when GAs pay their affiliated planners. The settlement support fund, which fueled the insurance agent scouting competition and unfair contract transfers, will also be included in the 1200% rule limit.”
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, “The 1200% rule limits the insurance sales commission, including first-year commission and bonuses, to a level equivalent to 12 months of premium. However, the rule was previously limited to direct sales agents and exclusive agents under insurance companies. The sales incentives and bonuses paid by GAs to their affiliated planners within the first year faced no such limits, allowing them to exceed promotional costs complying with the rule.”
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, “There has been criticism that the 1200% rule was ineffective because GA-affiliated planners, who account for more than half of the industry, were outside the regulatory boundary. The financial authorities have thus proposed additional improvements. However, they plan to exclude 3% of the monthly premium from the 1200% rule for GAs due to the expenses incurred for internal control organization and personnel (compliance management costs).”
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, “To strengthen the retention and management of sales channels, maintenance and management fees will be paid monthly. If the contracted insurance is maintained normally, maintenance and management fees will be distributed over 3-7 years (provisionally) to encourage long-term contract maintenance. Previously, the fees were essentially paid upfront (1-2 years), offering little incentive for mid-to-long-term contract management.”
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, “The structure for spending product-specific business expenses will be comprehensively overhauled to ensure that costs are spent according to the intended purpose. To avoid excessive allocation of contract management costs, which can be set autonomously by insurance companies, upfront commission fees for protection-type insurance will be kept within the contract costs assigned to each product (new contract costs/representative subscription attribute standards).”
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, “Additionally, insurers must strengthen the management through their own product committees by reviewing the appropriateness of the level of business expenses allocated to each product. The results of the appropriateness review must be reported to the CEO, and meeting documents must be retained for more than 10 years.”
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, “Insurance companies also need to formulate internal ‘principles for reasonable business expense allocation’ by considering past expenditure details, inflation rates, and future cash flows. Clear legal grounds will be defined for business expense regulations with ambiguous sanction grounds, promoting effective sanctions for irresponsible business expense spending.”
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, “However, since such reforms significantly impact sales channels such as planners and GAs, the financial authorities plan to finalize their proposals after collecting sufficient feedback through briefings in the first quarter of next year.”
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, Vice Chairman Kim said, “Given the many stakeholders related to these improvement plans, we will fundamentally reform the sales commission structure through additional opinion gathering processes, restoring public trust and establishing a sound order in the sales market.”