On June 23, the FSS announced it held a workshop on internal controls for insurance companies in the first half of 2026.
During the workshop, the FSS highlighted recent incidents involving personal credit information leaks and illegal sales practices through certain GAs, reiterating the need for insurance companies to manage the risks associated with third-party sales delegation.
The FSS stressed that the ultimate responsibility for consumer harm arising from the sales delegation process lies with the delegating insurance companies. It called for continuous enhancement of management systems in accordance with the 'Guidelines for Third-Party Risk Management for Insurance Companies' implemented in December of last year.
Particularly concerning is the impending implementation of the expanded '1200% rule' on July 1, which raises fears of excessive competition in recruiting agents and irregular policy designs. The FSS warned that aggressive pursuit of sales results could lead to unnecessary policy switching, potentially harming consumers.
The FSS plans to intensify inspections and sanctions against unhealthy sales practices that lead to consumer harm, holding both insurance companies and GAs accountable for management responsibilities, including unfair policy switching.
Strengthening internal controls for insurance products was also identified as a key issue.
The FSS noted that while most products are developed and sold autonomously following deregulation, intensified competition focused on short-term results has led to the emergence of substandard products that can trigger insurance fraud and excessive non-covered treatments.
In response, the FSS requested that product committees enhance their accountability and implement a consumer-centered performance compensation system (KPI) to strengthen internal controls throughout the product lifecycle.
The FSS plans to conduct a focused review of the internal control systems for insurance products from the consumer's perspective in the second half of the year.
An FSS official stated, "As the paradigm of financial supervision and inspection shifts from post-event detection to proactive prevention, the insurance industry must establish and operate internal control systems with consumer protection as a core principle."
* This article has been translated by AI.
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