KOREAN INSURERS OPPOSE BANCASSURANCE EXPANSION

The General Insurance Association of Korea (GIAK) and the Korea Life Insurance Association (KLIA) have issued an official statement opposing the extension of bancassuance business in South Korea to whole-of-life and motor insurance. GIAK chairman Ahn Kong-hyuk and KLIA chairman Namkoong Hoon said that whole-of-life and motor insurance policies “are not suitable for sales through bancassurance channels”. Mr Ahn said that “bancassurance has given rise to enough side effects as it is. If bancassurance operations expand to cover whole life and auto insurance policies, serious damage will be done to average policyholders”. Mr Namkoong said that, if the move, which is supported by central government and banks, was allowed to go ahead, “countless layoffs will be inevitable”. He added that the assurance products currently sold by banks had a 12.61% negligence rate, through failing to provide potential policyholders with adequate information, compared with a 0.56% negligence rate when such products were sold through insurance companies. Mr Ahn claimed that insurers were increasingly required to rely on banks, and that this was creating a power imbalance between the two sectors.