MG Insurance's new business operations have been suspended, and all existing insurance contracts will be transferred to the top five insurance companies without changes to conditions.
On the 14th, the Financial Services Commission announced at its regular meeting that it has decided to impose a partial suspension of business prohibiting MG Insurance from entering into new insurance contracts and to establish a bridge insurance company for contract transfer.
Accordingly, the signing of new insurance contracts and changes to existing insurance contracts will be suspended for six months from the 15th to Nov. 14. The collection of premiums and the payment of insurance benefits will remain unchanged. As of the end of March, approximately 1.51 million insurance contracts were held by MG Insurance, with about 90% consisting of long-term insurance products such as health and injury insurance. The insurance contract holders include about 1.21 million individuals and about 10,000 corporations.
The transfer of MG Insurance contracts to other insurers is expected to take more than a year. To ensure the stable maintenance and management of insurance contracts during the preparation period for the transfer, the Deposits Insurance Corporation will establish a bridge insurance company. After other insurance companies complete preparations such as building computer systems, the final transfer of contracts will take place. The first contract transfer is expected to occur in the second to third quarters, with the final contract transfer projected to be completed by the end of 2026.
Secretary-General Kwon Dae-young held an emergency briefing immediately after the regular meeting and noted, "The financial authorities concluded that the self-management normalization, sale, or merger of MG Insurance is practically impossible, and to protect policyholders, stabilize the financial market, and maintain trust in the insurance industry, the method of contract transfer through a bridge insurance company is unavoidable," adding, "We will ensure that the existing contract conditions are transferred 100% safely without any disadvantages or losses."
The financial authorities have announced plans to hire some MG Insurance employees who are essential for operations such as computer operation and insurance benefit payments at the bridge insurance company. MG Insurance has a total of 521 employees, and the scale of personnel to be hired by the bridge insurance company is undecided. Secretary-General Kwon stated, "Some employees hired by the bridge insurance company may be employed by the top five insurance companies together with the final transfer of contracts." The Insurance Association is expected to support the transition of 460 insurance agents from MG Insurance to other insurance companies.