hairman Choi Jong-ku of the Financial Services Commission (FSC) said FSC will press for a financial reform package built around 10 major tasks at a meeting of financial consumers held on Sept. 25 at the Korea Non-Life Insurance Association building in Chongro, downtown Seoul.
The 10 major tasks in the reform plan include allowing people with chronic diseases such as high blood pressure to buy insurance policies and cutting interest rates on defaulted loans by 3 percent per year. In detail, those with such chronic diseases as cancer and who received treatments for the disease for at least once in the past five years were not allowed to buy the insurance policies, but they will be allowed to buy the insurance policies from April next year when the reform plan is approved by FSC.
Non-life insurance firms will now look at the medical treatment in the past two years rather than in five years when they check on the medical records of the insurance policy buyers. The FSC will have the non-life insurance firms to come up with a joint non-life insurance product for those with chronic diseases so that they will not have to pay much higher insurance premiums.
FSC also plans to announce the minimum interest rates charged on the defaulted loans set at 12 percent per annum, three percent lower than the current interest rates of 15 percent per annum in a move to have the interest rates more in tune with those charged in advanced countries like Germany and the U.S.
The Korea Development Institute and the Korea Housing Finance Corp. found out that the burdens on the financial firms from their defaulted loans would be around 3 percent on top of the usual interest rates on loans, and some 1.35 million borrowers who defaulted on loans would benefit from the cuts.
FSC also plans to cut the insurance premiums on non-life insurance policies in general and will hold consultations with the Ministry of Health and Welfare and a council made up of government-owned and private insurance firms on such matters as strengthening the guarantee part of the non-life insurance products in a bid to lower the insurance premiums.
The Hatssal Loan (Sun Light Loan) Loan, an online loan facility bearing 10.5 percent interest rates per annum, 1 to 2 percent lower than those charged on the offline loans, will be introduced next January for the public.
Both life and non-life insurance firms decided to return the insurance money that has yet to be claimed to the policyholders through a system they will come up with by December, with the tentative name of “Claiming All of My Insurance Money.”
The insurance money includes that to be paid due to the suspension of the insurance policies before their maturity dates, totaling 5.1 trillion won in 2.83 million cases, those yet to be claimed with their maturity dates, totaling 1.2 trillion won in 240,000 cases, and those with their maturity dates long past, totaling 1.3 trillion won.
A policy finance system will be overhauled so that necessary funds are effectively channeled into innovative businesses and sectors related to the 4th Industrial Revolution, which have significant job-creating potentials. Companies with competitive technology and innovative ideas will be enabled to take out loans with non-tangible assets, such as patent and future sales as collateral. Moreover, the FSC will come up with measures in September for non-regular workers at public financial institutions to sign full-time contracts.
The FSC will soon announce measures to encourage steady job creation in the financial sector through the development of new innovative financial technology and services. Moreover, financial business licensing procedures will be improved to ease innovative financial companies’ entrance to the market.