insuranceA’s 11-year-old child suffered a severe burn when he was 2 years old and left a large scar. She recently decided to have the surgery following the opinion of her doctor, ‘Now that the child’s body has grown to a certain extent, get a skin transplant.’ It was an expensive operation, but she had children’s insurance from her birth, so she didn’t have to worry about hospital bills. However, she made an appointment for the surgery and contacted the insurance company, but she was told that the surgery was due to an accident before signing up, so there is no coverage. In an article posted on the Internet Mom Cafe, Mr. A said, “I signed up for child insurance before birth, and after hearing the solicitor’s advice that a better product came out, I changed my car, but I didn’t expect to suffer this kind of loss. I knew how it could be like this, but I only feel regretful.”
Mr. B received the insurance solicitor’s insurance analysis service introduced by an acquaintance. The insurance solicitor was instructed to cancel the existing product and change it, saying that there is a ‘cost-effective’ whole life insurance that does not need other insurance as it covers most of the diseases as well as death. However, B was unable to sign up for a number of special contracts for integrated life insurance due to the disease he had been diagnosed with, and as the coverage benefits available from the canceled insurance disappeared, he filed a complaint with the Financial Supervisory Service.
Among the insurance-related posts on the Internet Mom Cafe, you can easily see the experience of receiving the advice of an insurance solicitor and changing insurance, as in the case of Mr. A, but the insurance payment was refused due to medical history before signing up. The Financial Supervisory Service has issued a consumer advisory several times recently as complaints about transfers such as those of A and B have not ceased.
It is a common perception among financial authorities and the insurance industry that the continued damage to insurance exchanges or replacement contracts is fundamentally due to the business situation that is too swayed by fees.
A reinstatement contract means that the solicitor unfairly terminates the existing insurance contract and makes a new insurance contract purchase.
In particular, mid- to large-scale corporate insurance agencies (GAs) that deal with products from several insurance companies rarely take responsibility for unsound business practices such as incomplete sales, and are in the blind spot of fee regulation, so there is a relatively high risk of consumer damage due to excessive and turbulent competition. criticized for being larger.
According to the insurance industry on the 27th, large GAs have recently offered new contract fees that exceed the upper limit and various additional benefits.
Since last year, the so-called ‘1200% rule’, an insurance industry supervision regulation that cannot exceed 1,200% of monthly premiums, has been enforced for the upper limit of fees paid to insurance solicitors for one year after the insurance contract has been signed. It is reported that there are cases of scouting in large numbers.
The financial authorities also recognized the turbidity, and at the end of last year started to investigate the current status of scouting against large GAs with more than 500 people.
The insurance industry analyzed that scout contracts that offer such excessive commissions have performance commitments, leading to conversion of existing customers to fill their performance.
The reason why GA can impose a fee condition that is much higher than a one-year premium is because the 1,200% rule and sanctions for violation apply to insurance solicitors belonging to insurance companies, but there is no force on solicitors belonging to insurance agencies.
An insurance industry official said, “The financial authorities neglect the excessive commission behavior of insurance agencies, and the commission limit is gradually becoming a paper tiger.”
He argued, “Some GAs, trying to increase their market influence, abuse this atmosphere and forcefully transfer insurance agents, which leads to mass production of transfers.”
As of 2020, the commission income of medium and large corporate insurance agencies with 100 or more insurance solicitors amounted to 7.2 trillion won, excluding telemarketing agencies. In 2020, the number of insurance solicitors affiliated with 190,000 was similar to that of 200,000 affiliated with insurance companies.
Considering that some insurance companies split the insurance solicitor organization into insurance agencies last year, it is estimated that the current workforce of corporate insurance agencies has surpassed that of insurance companies.
The claim of insurance companies experiencing workforce loss is that the system that does not include GA is inevitably ineffective as a ‘half’.
However, the financial authorities took the position that there is no need to rush to supplement the fee regulation.
An official from the financial authorities said, “It has been a year since the 1,200% rule was implemented, so we need to evaluate the operation status and improve the areas to be supplemented according to the results.”
Measures to strengthen the accountability of corporate insurance agencies, such as blocking incomplete sales, are also being delayed.
Another official from the FSC said, “Last year, we were going to announce a plan to strengthen GA accountability, but it is taking longer because there are many pending issues.”
Another official in the insurance industry said, “Business behavior that is too dependent on commissions is a major cause of consumer burden and damage.
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