(Seoul=News1) = Kim Byeong-hwan, Chairman of the Financial Services Commission, and Lee Bok-hyun, Director of the Financial Supervisory Service, visited the NH Nonghyup Bank headquarters on Chungjeong-ro in Seoul on the morning of the 23rd, having a meeting related to the implementation of safe lending practices. (Provided by the Financial Services Commission) 2024.8.23/News1 Copyright (C) News1. All rights reserved. Unauthorized reproduction and redistribution, AI learning prohibited. /Photo=(Seoul=News1)
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, “Financial authorities have formalized a plan to convert rapidly growing insurance agencies (GAs) into specialized insurance sales companies. With GAs being identified as a hotbed of incomplete sales, significant changes are expected in the future insurance sales channels, as they may eventually be allowed to negotiate prices (insurance premiums) instead of merely asking for financial-level responsibility. The financial authorities have decided to finalize improvements to the new insurance accounting standard, IFRS17, which has been accused of inflating performance, by October and to reflect it in this year’s financial statements. It is expected to be a significant variable in insurers’ performance this year.”,
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, ‘On the 28th, Chairman Kim Byeong-hwan held a meeting with the heads of the Life, Non-Life, and Fire Insurance Association, the Insurance Development Institute, and 10 insurance company CEOs as the third event of the financial sector relay meeting.’,
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, ‘In relation to the current issue in the insurance industry regarding sales channel innovation, Chairman Kim mentioned that as sales channels have been undergoing significant changes recently, such as the expanding influence of GA, there are plans to consider granting responsibilities equivalent to financial institutions to GAs under the system of specialized insurance sales companies and granting responsibility for sales channel management (operational risk) to insurance companies. This is the first time that financial authorities have formalized the allowance of specialized insurance sales companies. ‘,
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, ‘GAs, as a representative channel selling products of various insurance companies, are becoming increasingly dependent on insurance companies. However, they have been criticized for incomplete sales due to excessive commissions and scout competition. If they are converted into specialized sales companies, GAs, not insurance companies, will have direct responsibility for incomplete sales. It is anticipated that future challenges will include whether to manage information of insurance policyholders and whether to grant negotiation rights for insurance premiums according to sales volume. The Insurance Agency Association has recently commissioned a research project for the conversion to specialized sales companies.’,
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, ‘In order to innovate sales channels, the Financial Services Commission has decided to completely review insurance premium systems for platform insurance comparison services, including automobile insurance.’,
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, ‘Regarding the suspicion of “inflating performances” related to IFRS17, Chairman Kim commented, “We need to look back objectively and see if the rushed implementation in 2023 led to short-term performance and bleeding competition of products.” He stated, “Regarding the tasks for improving IFRS17, we will finalize the review by October, submit it to the insurance reform meeting in October, and apply it from the year-end financial statements onwards.”‘,
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, ‘Concrete guidelines on issues such as the assumed lapse rate of non-cancelable/declinable insurance that has sparked controversy due to “rubber-band accounting,” and the initial higher amortization rate that inflates net income, will be finalized in October by the authorities. Since the new standards will be applied in this year’s financial statements, there is a possibility that insurers’ net profits may decrease compared to the previous year. Chairman Kim emphasized, “As the first interest rate reduction is expected after the introduction of the IFRS17 system, it is necessary to proactively strengthen risk management, such as sound profit enhancement and debt management.”‘,
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, “In terms of future food for insurers, the activation of trust funds, pension conversions, and liquidity of life insurance proceeds, such as providing pensions as collateral using the death benefits of life insurance policies whose premiums have been paid up, have also become subjects of review. Chairman Kim suggested that insurers’ direct involvement in the government’s upcoming ‘new rental housing supply scheme’ is also being considered for stable asset management, given the characteristics of the long-term industry.”,
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, ‘Regarding the expected implementation of the Real-Name Simplification Service for actual medical insurance claims scheduled for October 25, Chairman Kim urged insurance company representatives to take direct responsibility. He emphasized, “We must prioritize keeping our promise to 40 million insurance consumers and proceed with the plan.” Amid concerns that there may be a “half-hearted implementation” due to low participation rates at hospitals smaller than large hospitals, the Chairman encouraged the industry to actively prepare.’,
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, ‘At this event, Kim Cheol-joo, President of the Life Insurance Association, emphasized the need for sufficient consultations for improvements related to IFRS17, K-ICS, and requested support from financial authorities for new business initiatives such as revitalizing the silver and nursing care industries. Lee Byeong-rae, President of the Non-Life Insurance Association, highlighted the need for measures that can improve the sustainability of both public and private insurance through strengthening non-reimbursement management and improving the structure of actual-cost products.’,
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, ‘Heo Chang-eon, Director of the Insurance Development Institute, stated that they are proactively preparing for risk management of lithium-ion batteries in light of the increasing incidents of electric vehicle fires. He requested continued cooperation and support from the insurance and medical sectors for the successful implementation of the Real-Name Simplified System for real-cost medical claims automation system, not only in primary hospitals but also in secondary businesses like clinics and pharmacies.’,
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