South Korea: FSC mulling plan to boost and transform insurance business
Source: Asia Insurance Review | Nov 2015
New measures to deregulate and stimulate the stagnant insurance market are being considered by the Financial Services Commission (FSC), including loosening reporting requirements for new products.
Mr Kim Seon-moon, an official at the FSC, said: “We are trying to change that, to give greater freedom to firms so that they would be encouraged to design more creative products.” In addition, rules will be changed to encourage insurers to compete based on quality instead of on volume, reported the JoongAng Daily.
Insurance companies will also be given greater freedom in their asset management activities, with various regulations, that place limits on the types of assets they are allowed to handle and the amount they are allowed to hold, to be abolished.
The FSC has also decided to make it easier for allowing Korean insurers to provide security to their overseas affiliates. The change is to permit Korean insurers to provide collateral to banks in overseas countries when their affiliates open a letter of credit at the banks. Lloyd’s market membership requires insurers to provide collateral to their overseas affiliates. The FSC also plans to change the current 10 standard provisions that govern the different insurance products including life, casualty, medical and auto insurance. It aims to deregulate eight out of 10 provisions by early 2017.
The FSC said it will closely monitor for signs of any potential adverse effects from the reforms, and changes will be made step by step until 2018.