FSS Holds "Workshop for Improving Performance Evaluation Practices in Insurance Companies"

Jisun Park: "Reflect Sustainable Growth and Consumer Interests in a Balanced Way"
Short-Term Oriented Evaluation Systems Need Improvement

The Financial Supervisory Service announced on September 9 that it held a "Workshop for Improving Performance Evaluation Practices in Insurance Companies" for executives of insurance companies and insurance associations.

Jisun Park, Deputy Governor in charge of insurance at the Financial Supervisory Service, stated, "Please work to ensure that insurance companies' performance evaluation systems move away from a focus on short-term and superficial growth, and are instead designed to achieve a balanced approach to sustainable growth, financial soundness, and consumer interests from a mid- to long-term perspective."

During the workshop, the Financial Supervisory Service shared issues identified in CEO performance evaluations, including a focus on short-term performance, a lack of incentives for mid- and long-term sound management, and the formal design and operation of consumer protection performance indicators. The agency emphasized the necessity for voluntary improvements within the industry.

In addition, the FSS requested that insurance companies thoroughly reflect consumer protection efforts in the key performance indicators (KPI) of major executives by strengthening consumer protection indicators, avoiding KPIs that conflict with consumer interests, and including indicators related to long-term maintenance and management of insurance contracts.

The workshop also covered case studies of performance evaluation systems and disclosures in major overseas countries. Seungjun Lee, Research Fellow at the Korea Insurance Research Institute, introduced the cases of Aviva in the UK and Prudential in the US, explaining that these companies specify the definition, targets, and actual achievement of consumer protection indicators within their performance evaluation criteria and link them to compensation.

The FSS intends to supplement the industry's executive compensation system so that best practices are operated more concretely and effectively, taking into comprehensive consideration previous inspection findings and international case studies.

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