Gov. Zhin Woong-seob of the Financial Supervisory Service, L, Chairman Lee Soo-chang of the Korea Life Insurance Association, 2nd L,  Chairman Lee Choon-keun of the Insurance Agency Association, 2nd R, and Chairman Chang Nam-shik of the Korea Non-Life Insurance Association, R, shake hands after signing an agreement for the self-rule regulations for the insurance community in Korea at Post Tower in Sokong-dong, Seoul, on Nov. 3. Some 60 CEOs of life insurance, non-life insurance firms and their agencies met at the meeting and decided to draw up self-rule regulations for the insurance industry in Korea.(Photo:KLIA)

The insurance business community agreed to draw up self-monitoring regulations to prevent unfair deals and incomplete sales of insurance policies, for the first time in the financial sphere in Korea.

Some 60 CEOs representing life insurance, non-life insurance firms and their agencies in the country met on Nov. 3 at the Post Tower in Sokong-ro, in downtown Seoul, along with Gov. Zhin Woong-seob of the Financial Supervisory Service (FSS), Chairman Lee Soo-chang of the Korea Life Insurance Association (KLIA), Chairman Chang Nam-shik of the Korea Non-Life Insurance Association (KNLA), and Chairman Lee Choon-keun of the Insurance Agency Association (IAA). 

They discussed the issues related to drawing up self-monitoring regulations to improve the discipline in the insurance policy deals. Those gathered at the meeting included the heads of 25 life insurance firms, 11 non-life insurance firms, and 137 insurance agencies with more than 100 sales agents each.

Based on the agreement reached at the meeting, the insurance firms and their agencies will draw up a standard agreement between the insurance companies and their agencies by the end of this year so that the fees excluded from the agreement will not be charged nor accepted as they are illegal.

The agreement will also forbid such things as hiring personnel away from other insurance companies or agencies and the payments of performance bonuses that would intensify competition in the insurance market. The agreement will also include provisions designed to upgrade the rights of customers.

The Korea Life Insurance Association (KLIA) was established in 1950 as a non-profit corporation and has remained committed to promoting common benefits for member companies and maintaining market discipline. In addition, it has contributed to the development of the life insurance culture. The KLIA has 22 life insurers as full members and two associate members, Korean Re and IBK Pension Insurance. 

Momentum for the growth of the life insurance industry in Korea kicked off in the 1960s, when the Insurance Business Law was enacted and savings campaigns for Korean citizens were implemented. Steps to deregulate the insurance industry were taken in the mid-1980s, allowing in new companies into the Korean market. In the 1990s, the World Trade Organization was formed and Korea joined the OECD, accelerating the nation's globalization and deregulation. In the 2000's, life insurers enhanced financial strength and competitiveness by achieving management innovation, improved financial structure, and introduced advanced systems for international conformity. They are making forays into foreign markets including China and India. The Korean life insurance industry recorded 89 trillion won in annual premiums received and 497 trillion won in total assets as of the end of March 2012, making it the world's eighth largest market. 

In step with ongoing market trends toward specialization and diversification, the KLIA pledges its upmost efforts to contribute to developing the life insurance industry into the core industry armed with global competitiveness and universal banking insurance function through the spread of sound life insurance culture, future-oriented and advanced system and product development.

Following are some of the work that KLIA performs for its members: 

- Support and improve life insurance policies and system; 

- Research existing insurance laws and statutes and offer suggestions for revising them;

- Investigate short and long-term tasks for developing the life insurance industry;

- Provide information related to the domestic and foreign insurance and financial market;

- Run Qualification test for life insurance solicitors and register solicitors;

- Support training for solicitors and administer solicitor license test;

- Operate self-regulatory activities to maintain market discipline; and

- Identify and investigate irregularities of soliciting activities.