The Financial Supervisory Service (FSS) is moving to publicly disclose the rate of policy switching among insurance companies on a semi-annual basis. The plan includes counting any policy switch where at least one coverage overlaps between the existing and new contracts, and it aims to strengthen management against unfair policy switching by expanding the scope to include contracts transferred to other insurance companies.
According to the financial sector on October 7, the FSS is establishing criteria to count policy switches that occur within six months before or after the new insurance application date, where at least one coverage matches between the existing and new contracts.
Initially, the FSS will compile the policy switching rates by individual insurance companies, with plans to later broaden the scope to include switches between different insurers. For contracts made through general insurance agencies (GAs), the switching rate will be calculated based on the entire GA channel rather than individual agencies.
Based on this data, the FSS is preparing to publicly disclose the semi-annual policy switching rates for insurance companies. The disclosure will cover life insurance products such as whole life, term life, health, accident, and cancer insurance, as well as non-life insurance products including health, accident, cancer, long-term care, and children's insurance.
Policy switching refers to the process of canceling an existing insurance policy and taking out a new one. While the act of switching itself is not inherently unfair, it can lead to consumer harm if agents encourage clients to switch to less favorable policies to boost their new business performance.
There may be losses in surrender benefits when canceling an existing policy, and new policies may impose waiting periods or reduced coverage periods. This means that, depending on the product, there could be a period during which no benefits are paid or only partial benefits are provided.
The FSS is enhancing its oversight due to a rise in complaints related to unfair policy switching. In the first quarter of this year, the FSS received 211 complaints regarding unfair switching, a 54% increase from 137 complaints in the previous quarter. There have also been ongoing cases where agents who have switched companies encourage existing clients to switch their insurance policies.
A financial sector official stated, "Clarifying the criteria for policy switching can help reduce consumer harm," but added, "We must ensure that customers are not discouraged from making switches that are genuinely beneficial to them."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.