The capital industry is reported to propose to the Lee Jae-myung government to allow entry into the insurance agency (GA) sector on the 16th. The capital industry, which mainly focuses on auto installment financing, is seeking permission to establish GAs for packaging and selling auto insurance.
According to the industry, the Credit Finance Association plans to convey this request to the government. The capital industry argues that allowing entry into GAs would enable them to simultaneously offer installment financing and insurance services, thereby enhancing consumer benefits.
Currently, major advanced countries like the United States and Europe provide benefits such as discounts on capital installment payments or insurance premiums based on safe driving scores through partnerships between capital businesses and insurance companies. The domestic capital industry has consistently requested permission to enter the GA sector from financial authorities over the past few years.
Currently, capital companies cannot engage in insurance sales under the Insurance Business Act. The current Insurance Business Act restricts only card companies among specialized credit finance companies from selling insurance.
The financial authorities stated that they would consider allowing only those capital companies that participated in the My Data project in 2021 to establish GAs. However, discussions have since stalled. It has been reported that the financial authorities have not made a judgment on whether to regard capital companies establishing GAs as financial institution insurance agencies, like banks and card companies, or as insurance entrants for My Data business operators. Since banks are prohibited from selling auto insurance in bancassurance, fairness issues are also raised.
This year, Hyundai Capital applied to the financial authorities for permission to sell insurance as an innovative financial service, but it was rejected.
Jeong Yoon-young, a researcher at Hana Financial Research Institute, noted, "If capital companies provide both auto financing and insurance, they can reduce overlapping administrative and marketing expenses." She added, "These expense reductions can lead to better terms for financial products and reductions in insurance premiums for consumers, potentially creating positive synergies."