Plan to boost insurance businessNew measures to deregulate and stimulate the stagnant insurance market are being considered by the financial Services Commission.
The FSC said on Thursday that it will loosen current rules that require insurance companies to report details of new insurance products before they are offered or sold.
“Companies had to file reports to the financial regulator even when making products that are very similar to the existing line of already approved products,” said Kim Seon-moon, an official at the FSC.
“This has discouraged companies from making new products as it took too much time and effort to gain approval. We are trying to change that, to give greater freedom to firms so that they would be encouraged to make more creative [products].”
The new rule is expected to “nearly abolish” pre-reporting requirements, according to the FSC, and lessen the number of pre-reporting cases by 70 percent to around 400 from 1,525 in 2014.
“The country’s insurance industry is structured in ways that encourage companies to sell the same products for the same prices. It is more of a retail competition where the winner has more sales channels,” Yim Jong-yong, chairman of the FCS told reporters during a media briefing on Thursday.
“We will change the broader outline to change this competition over quantity to competition over quality.”
The FSC also plans to make changes to the current 10 standard provisions that govern the making of different insurance products including life, casualty, medical and auto insurances. It aims to deregulate eight out of 10 provisions by early 2017.
Rules regarding casualty and auto insurance will be reformed more gradually given their impact on policyholders. The FSC said it will closely monitor signs of any potential side effects from the reforms and changes will be made step by step until 2018.
Insurance companies will also be given greater freedom related to their asset management activities, abolishing various regulations that had placed limits on the types of assets they were allowed to handle and the amount they were allowed to hold.
The FSC said it will make overall changes to regulations related to the insurers’ handling of foreign currency and derivatives, and loosen qualifying standards for issuing subordinated debts and hybrid bonds.
The FSC will compile experts’ opinions on the outlines and set up policy guidelines within this month, Yim said.
BY PARK JUNG-YOUN [firstname.lastname@example.org]