FSS: "Insurance Companies Must Strengthen Self-Regulation and Internal Controls on Advertising"

Only One Home Shopping Advertisement Sanction in the Past Five Years
Stronger Association Review Standards
Expanded Disclosure of Broadcast Advertising Data, Including Number and Airtime by Insurance Company

The Financial Supervisory Service has urged insurance companies to strengthen internal controls and disclosure regarding TV advertisements that provoke consumer anxiety.

On this day, the Financial Supervisory Service held a meeting with the Life Insurance Association, the General Insurance Association, 13 major insurance companies that run broadcast advertisements, and corporate insurance agencies (GAs) that operate in home shopping, to discuss measures to improve the soundness of insurance product TV advertising.

Kim Ukbae, Deputy Governor of the Financial Supervisory Service, pointed out, "Although the insurance industry has established and operated self-regulation to eradicate false and exaggerated advertisements, overly provocative ads continue to air repeatedly, encouraging impulsive insurance subscriptions."

Deputy Governor Kim stressed that, in order to fundamentally address this issue, the insurance industry needs to make proactive self-corrective efforts, led by the Life Insurance Association and the General Insurance Association. He called for establishing effective self-regulation, increasing transparency in TV advertising information, and strengthening internal controls at insurance companies and corporate insurance agencies (GAs).

He particularly emphasized the importance of strengthening self-review processes at insurance companies, describing internal review as 'the first line of defense against false and exaggerated advertisements,’ and asked insurers to work to prevent consumer damage.

The Financial Supervisory Service will also tighten the broadcast advertising review standards of the Life Insurance Association and the General Insurance Association. This is because the current standards are insufficiently detailed, and there have been recent cases of improper TV advertisements that could cause consumer misunderstandings.

For example, there were cases using the phrase 'Receive, receive, and receive again' without sufficiently informing how many times a policyholder could claim insurance benefits, or displaying important conditions in fine print when using phrases like 'cancer treatment benefits paid every year for each treatment.'

Accordingly, the associations will revise their review standards and, going forward, continually communicate cases that do not meet standards throughout the industry to prevent recurrences.

Sanctions on home shopping insurance advertisements will also become more effective. Because home shopping insurance ads are broadcast live, prior review is difficult, so ads are reviewed retrospectively after broadcasting. However, association-level review alone cannot prevent unsound advertisements in advance, highlighting the need for practical sanction measures to supplement this. Accordingly, the Financial Supervisory Service is establishing detailed improvement measures, such as rationalizing grace periods before sanctions and lowering the sales incompleteness rate sanction standard, taking into account the home shopping average.

Disclosure of information on the status of insurance product TV advertising will also be expanded. Last year, there was an average of 1,121 airings per day and 57 hours of broadcast time for insurance product TV ads. Compared to the previous year’s daily average of 672 airings and 35 hours, the number of ads increased by 66.9% and broadcast time by 65.2%, respectively.

However, disclosures regarding TV ad status to strengthen consumer protection and choice are currently limited to the associations revealing related sanctions. The Life Insurance Association and the General Insurance Association will collect industry feedback and voluntarily prepare detailed disclosure standards, including the number of airings and broadcast time by insurer, as well as each association’s ad review activities.

The Financial Supervisory Service will also seek ways to ensure that internal review by insurers and GAs is substantively strengthened, including direct participation of consumer protection departments in the ad production stage.

The Financial Supervisory Service stated that it would actively support the insurance industry in swiftly promoting self-corrective efforts, such as developing concrete implementation plans for the improvement measures discussed at the meeting.

Additionally, the Financial Supervisory Service, the Life Insurance Association, and the General Insurance Association plan to further strengthen monitoring to eradicate unsound sales practices through TV advertising.

This content was produced with the assistance of AI translation services.