Lee Chan-jin Seeks Legislative Support to Strengthen GA Regulations: "Limits to Ex-Post Supervision Alone"

More than 4,000 GAs and 330,000 agents, but internal controls and sales accountability lag
Incar Financial Service clawback controversy prompts consideration of full inspections of large GAs
Efforts underway to close regulatory gaps with insurers; politicians also back reforms

Lee Chan-jin, Governor of the Financial Supervisory Service (FSS), called on the National Assembly to support amendments to the Insurance Business Act and other relevant laws and regulations to strengthen internal controls and sales accountability at general agencies (GAs), or corporate insurance agencies. GAs have grown into a key sales channel in the insurance market, but the supervisory framework remains inadequate to prevent unsound business practices, including mis-selling and excessive commission competition, he said.

Financial Supervisory Service Governor Lee Chan-jin answers lawmakers' questions during a parliamentary audit of the Financial Supervisory Service and other agencies at the National Assembly on Oct. 19, 2026. Photo by Yoon Dong-ju.

Lee made the remarks in a congratulatory address at a policy forum on improving insurance solicitation practices and protecting consumers, jointly hosted by Rep. Park Seong-hun of the People Power Party and the Korea Insurance Research Institute at the National Assembly Members' Office Building in Yeouido, Seoul, on Nov. 3.

According to Lee, GAs have grown into a leading sales channel in the insurance market, with more than 4,000 agencies and over 330,000 affiliated insurance agents. However, he said, their internal controls and sales accountability systems have not yet been sufficiently developed to match their growth in scale.

"Consumer harm is also increasing as unsound business practices continue, including excessive sales commissions, improper policy replacements driven by competition to recruit agents, and mis-selling," Lee said.

He added, "There are limits to relying solely on ex-post supervision that individually detects and sanctions violations by more than 4,000 GAs and over 330,000 agents. Regulatory gaps remain, as key regulations that apply to insurance companies do not apply to GAs. Problems have also arisen, such as executives and employees changing jobs or insurance contracts being transferred to avoid sanctions."

"Financial authorities intend to pursue comprehensive improvements to the Insurance Business Act and other relevant laws and systems to strengthen GAs' internal controls and sales accountability and prevent unsound business practices in advance," he said. "The National Assembly's attention and support are more important than anything else if these efforts to improve the system are to produce tangible results."

At the FSS's parliamentary audit by the National Assembly's Political Affairs Committee on Oct. 19, Lee had also said that the FSS would work with the Financial Services Commission to support the drafting of a bill to strengthen regulations on GAs, which Committee Chair Yoo Dong-soo of the Democratic Party of Korea was preparing to sponsor.

Yoo is pursuing measures to apply to GAs Article 8 of the Insurance Business Act, which applies to insurance companies and governs the use of a trade name or business name, requiring them to identify themselves as companies engaged in insurance agency business. He also plans to extend to GAs the scope of Article 135 of the Insurance Business Act, which applies to insurance companies, so that they can be notified of measures taken in response to violations committed by former executives and employees during their tenure, and can record and manage those cases.

Financial authorities are concerned that the framework governing internal controls at GAs is inadequate relative to their rapid growth in scale. In response, they have pursued reforms to the sales commission system since July, including applying the "1,200% rule" to agents affiliated with GAs. The rule limits the commission paid to an agent in the first year of an insurance contract to 12 times the monthly premium, with the aim of curbing excessive competition to pay commissions upfront.

Despite these reforms, concerns persist about mis-selling by GAs, commission clawback practices, and information security risks.

GA business practices also came under scrutiny at parliamentary audits. At the Financial Services Commission's audit on Oct. 8, Rep. Kim Hyeong-yeon of the Cho Kuk Innovation Party criticized the commission clawback practices of Incar Financial Service, a mega-sized GA with about 24,000 agents. He pointed out that the company had clawed back up to 120% of commissions already paid for certain cases, including early policy cancellations, and criticized the practice for placing an excessive burden on young agents.

Following the criticism at the audit, Incar Financial Service submitted a plan to abolish the 120% commission clawback standard and cap clawbacks at no more than 100% of commissions already paid for clawbacks arising from Nov. 1 onward. The company also decided to apply the revised standard to existing contracts.

At the FSS's parliamentary audit on Oct. 19, Rep. Kim called for a comprehensive inspection of large GAs with at least 500 affiliated agents. Lee responded, "We are currently reviewing that matter." He added, "I hope you will help create the conditions for us to carry out our supervisory work diligently by properly establishing a regulatory framework for GAs on this occasion, so that these kinds of incidents do not happen again."

Information security at GAs has also recently emerged as a major issue. On Oct. 6, the FSS asked the GA Association and the Financial Security Institute to check 73 large GAs for signs of hacking attacks. The move was prompted by the need to strengthen security management systems at GAs, which handle large volumes of insurance policyholders' personal information.

Politicians are also calling for regulations related to GAs to be overhauled.

Jang Dong-hyuk, leader of the People Power Party, said in a congratulatory address on Nov. 3, "Above all, excessive competition in the insurance product sales market and the resulting problem of mis-selling are urgent issues that must be addressed." He stressed that "effective measures must be 마련돼야 to correct unsound business practices, including through reforms to the sales commission system and stronger internal controls at GAs, and to establish order in insurance solicitation."

Rep. Park also said, "In today's business environment, where manufacturing and sales are separated, it is more important than anything else to ensure consistency in regulations governing those responsible for sales and to make solicitation practices more transparent, so that harm caused by overheated and disorderly competition at the solicitation stage is not passed on to consumers."

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