South Korea's insurance regulator, the Financial Services Commission (FSC), has blocked the Korea Insurance Training Institute's equity investment in an AI joint venture, ruling it an illegal business practice under current law.
The regulatory authority has determined that the nonprofit educational institution's investment in a for-profit corporation violates the Insurance Business Act by exceeding the institution's authorised scope of duties. The ongoing dispute between the regulator and the institute has sparked controversy, particularly because the FSC previously indicated that the institute could decide the matter autonomously.
A conflict emerged when the Korea Insurance Training Institute attempted to form a joint venture to market its in-house AI insurance education tools— including an AI Sales Coach, an AI exam question generator, and a personalised learning experience platform. The project framework detailed a KRW1 bn ($750,000) investment into a KRW2.5bn won AI joint venture, yielding a 40% ownership stake for the institute.
The institute clarified that it is only taking a minority stake as an investment, rather than setting up a subsidiary to run a for-profit business. It also introduced risk-minimising safeguards, including a put option to reclaim the entire investment within three months of the next president taking office.