November 26, 2024

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(Financial Services Commission)

Authorities are planning to slim down on the procedure for insurance companies acquiring foreign subsidiaries.

The Financial Services Commission, South Korea's financial regulator, announced Friday its planned revision of the Enforcement Decree of The Insurance Business Act, reducing down the procedures for insurance companies seeking to acquire foreign subsidiaries.

Currently, Korean insurance companies must either obtain direct approval from the FSC or submit a preliminary report when acquiring an overseas subsidiary overseas, depending on the business type.

Previously, only businesses that were registered as an insurance business, an underwriting insurance business, a damage evaluation business, an insurance brokerage business, a financial research business related to insurance, an investment advisory business, discretionary investment business, a collective investment business or a real estate business were allowed to report their acquisition in advance.

All other sectors were required to receive an approval from the FSC, a procedure that has often been perceived as ambiguous, potentially hindering investment decisions.

Under the proposed changes, the FSC seeks to broaden the range of businesses that are allowed to pre-report to health care and insurance contract counseling businesses.

Additionally, the acquisition processes for foreign subsidiaries of insurance brokerages and offshore financial entities will be made more straightforward with prior notifications. Sectors such as insurance brokerage already employ a pre-notification system.

These adjustments are expected to bolster overseas growth, offering clear pathways for insurance companies aiming for international expansion via subsidiaries.

Also included in the amendment is a provision set for 2024, where credit card firms will be mandated to cap the proportion of sales by insurers to 25 percent or below when vending insurance products. Exceptions will be granted if a credit card company collaborates with four or fewer insurers, allowing up to 50 percent sales from each provider.

By Moon Joon-hyun  (mjh@heraldcorp.com)