South Korea's Financial Services Commission is planning to overhaul the way in which insurance is regulated for the first time since 1993.

It was in that year the 'liberalisation' occurred. More revolutionary change appears to be on the way in the new plan. In principle, insurance companies will no longer be forced to report their new products to the financial authorities prior to the sale, except new types of risk coverage. (This is scheduled for April 2016 after the relevant regulations are amended.)   

Standard insurance policies established by the financial authorities will be abolished to encourage insurers to develop more diverse insurance products. Necessary provisions relating to the protection of policy holders and other things will be set out in relevant regulations. For indemnity and car insurance policies that require standardization, the industry associati to the FSS. (This is scheduled for the second half of 2016 after consultations with the industry and amendments to relevant regulations).

The FSC's grip on pricing is to be relaxed. The liberalization of insurance premiums in 1993 allowed carriers to determine prices for their insurance policies on their own, but not to an unbridled degree. Now, the rest of the restrictions are going, with the current ±25% ceilings on risk rate adjustments being removed to let insurance companies make swift pricing decisions. (This is scheduled for April 2016 after the relevant regulations are amended.)

Insurance companies will be given more room to set interest rates (or discount rates) that they might like to apply to premiums and payments of insurance claims for their insurance policies. The current system of calculating standard interest rates will be scrapped. The ceilings on insurers' interest-rate adjustments, applied to settlement of claims of interest-sensitive policies, will rise gradually.

Insurance companies, however, will be held more accountable than before. There will be stricter monetary penalties for any misconduct they may display while developing and selling their insurance policies. (A revision bill to the Insurance Business Act to increase penalties for misconduct will be submitted to the National Assembly in 2016.)

For consumers’ convenience, an online insurance market is to be opened this month, allowing HNWIs and others an easy means of searching, comparing and buying various insurance products.