FSS Tries More Insurance Firms Accept Payments of Insurance Premiums with Credit Cards
But the financial authorilty runs into arguments that insurance premiums have to be cut substantially to allow credit card payments
Gov. Yoon Suk-heun of Financial Supervisory Service(FSS).
The Financial Supervisory Service (FSS) ordered the insurance industry allow customers to pay insurance premiums with credit cards, and insurance firms have argued that it is difficult to do so unless the premiums are cut substantially.
According to both life and non-life insurers, the insurance supervisory authorities ordered the insurance industry on June 20 to improve the present premium payment conditions and other “improper” operational matters and report to them by the end of next month. An FSS official said they got reports on improper ratios of premium payments, which need to be boosted, and other inconveniences related to commodities to be paid for with cards, and they are ready to take action.
According to the life insurance industry, the payment of insurance premiums with credit cards in March came to only 3.5 percent of transactions, little changed from 3.3 percent in September, last year, when the FSS ordered the industry to take proper action to improve the ratio. Nine out of 24 life insurance firms don’t accept card payments at all. The big three life insurers, Samsung, Hanwha and Kyobo, don’t accept card payments after the first payments are made with cards, while the other life insurance firms accept payments of insurance premiums over the phone and Internet.
But the non-life insurance firms accept the payment of the premiums with credit cards as their insurance products mostly consist of those involving guarantees against damages. But they have to call non-life insurance firms every time they want to make payments with a card.
The situation became so hard that Rep. Park Won-soo of the Liberal Korea Party made a legislative proposal to amend the regulations on insurance premium payments aimed at boosting the use of the credit cards to make insurance premium payments.
Insurance companies have been saying that the fees charged on the credit cards when making insurance premium payments should be cut to below 1 percent from the current 2.2 percent charged to expand the use of the credit cards to pay for the insurance premiums to argue that the fees on the use of the cards are too high, although the most of the customers will prefer the cards to pay for the insurance premiums.
Many insurance firms said the fees charged on the cards should be cut to reduce the financial burden on customers and to expand the use of cards to pay insurance premiums, which are very expensive for many policy holders.
The FSS was established for a special purpose and is legally based on the Act on the Establishment, etc. of Financial Services Commission. It administers public affairs independent from the central and regional governments of Korea. The intended effect of its legal status as an independent public entity rather than a governmental operation is twofold: 1) to minimize government interference of the FSS’s supervision of financial institutions; and 2) to ensure a fair and independent execution of its supervisory services.
The purpose of the Financial Supervisory Service is to contribute to the growth of the national economy by 1) promoting the advancement of the financial industry and the stability of financial markets; 2) establishing sound credit order and fair financial transaction practices; and 3) protecting financial consumers, such as depositors. (Article 1, Act on the Establishment, etc. of Financial Services Commission).
A view of the building in Yeouido, Seoul, where FSS has offices.(Photos: FSS)