GA to Transform into Insurance Sales Specialist Company

The legal status of a subsidiary-type corporate insurance agency called GA is set to change as it transforms into an insurance sales specialist company. This transformation is expected to bring about significant changes in the way insurance sales are conducted.

According to the Financial Services Commission and the insurance industry, the National Assembly and the government are preparing a revision to the Insurance Business Act, including the establishment of a sales specialist company system. This bill is expected to be introduced at the end of the year or early next year.

The National Assembly and the government plan to expedite the process through legislation by members of the National Assembly, rather than through government legislation. The insurance industry believes that there is no reason to delay the establishment of a legal system for the financial industry and regulations.

An official from the GA industry stated that the chairman of the Korea Insurance Agency Association decided to create a basis for introducing a sales specialist company system through legislation by members of the National Assembly.

The biggest concern in the proposed bill is the responsibility and authority of the sales specialist company. The industry is taking it for granted that the primary sales responsibility will be transferred from insurance companies to the sales specialist company.

Currently, if GA makes an incomplete sale and causes damage to the policyholder, the insurance company is responsible for the first compensation. However, with the introduction of the sales specialist company system, it is expected that the sales company will be responsible for compensation.

Additionally, the basis for insurance companies to pay insurance contract maintenance fees to sales specialist companies will be established. This means that sales specialist companies will receive a maintenance fee for maintaining insurance contracts.

For example, if a sales specialist company negotiates with an insurance company to raise the maintenance rate by 5 percentage points, they will receive the agreed maintenance fee. This will incentivize sales specialist companies to focus on maintaining contracts, rather than just focusing on new sales.

This transformation is expected to bring about significant changes in the way insurance sales are conducted. With the introduction of the sales specialist company system, it is expected that incomplete sales will decrease and disputes with customers will also decrease.

The method of paying maintenance fees to sales specialists is likely to be negotiated individually between the insurance company that created the insurance product and the sales specialist company. This will allow insurance companies to maintain strategic products by raising or lowering maintenance fees depending on the strategic products.