The Financial Supervisory Service is reportedly reviewing consumer inconveniences related to credit card payments of life insurance premiums. This action is interpreted as a response to the criticism that consumers' payment options are limited as the ratio of credit card payments for life insurance premiums has remained at around 4% for seven years.
According to the insurance industry on the 3rd, the FSS is comprehensively examining complaints related to life insurance card payments. An FSS official explained, 'We are looking into the proportion of products that allow card payments among the life insurance products sold by insurers and the inconveniences that arise during the card payment process.'
According to a report by the Life Insurance Association, the card payment index for 17 life insurance companies, including ABL Life, Samsung Life Insurance, Heungkuk, and Kyobo Life Insurance, was 4.1% in the first quarter of this year. This represents a decrease of 0.2 percentage points from 4.3% in the fourth quarter of last year. This means that only 1.0281 trillion won out of the total premium income of 25.3603 trillion won in the first quarter was made through card payments. Since 2019, when the aggregation began, the card payment ratio has remained between 3% and 4%.
Excluding AIA Life and LINA Life, which primarily use telemarketing (TM) as a sales channel, all other life insurance companies have card payment ratios in the single digits, with eight companies having ratios between 0% and 1%. Hanwha Life, Kyobo Life Insurance, and IBK Pension Insurance do not accept card payments.
The Financial Supervisory Service has mandated the disclosure of insurance products that allow credit card payments since 2016. Beginning in the second quarter of 2018, insurers have been required to disclose card payment indices through announcements by insurance associations. This initiative aims to encourage card payments and expand consumer choices.
However, life insurance companies are not increasing the types of products available for card payments due to concerns about commission burdens. The insurance industry argues that accepting premium payments for savings-type insurance products via card increases their burden. Savings insurance involves receiving premiums and investing them elsewhere, then providing the promised principal and interest to customers when the term ends. However, if premiums for savings products are accepted via card, the amount that can be invested decreases, which reduces profits for the insurers.
Insurers have requested a reduction in fees, arguing that the burden is passed on to consumers, but the card industry has rejected this, leading to a stalemate between the two sides. Depending on the contract terms, large life insurance companies must pay a commission of about 2% for each card payment. Last year, a bill that included a mandate for insurance premium card payments was introduced in the National Assembly, but it is currently pending.
An official from a life insurance company noted, 'From the perspective of the financial authorities, it is not possible to unilaterally impose concessions on either the life insurance or the card sectors, so relevant alternatives have not been properly established.' They added, 'If card payments are made mandatory, the cost burden could be passed on to consumers, so careful measures need to be prepared.'