Last year, half of corporate insurance agencies (GAs) with fewer than 1,000 agents received the lowest grade in internal control evaluations by the financial authorities.
On the 25th, the Financial Supervisory Service announced the "GA 2024 internal control assessment results." Since 2022, the Financial Supervisory Service has conducted internal control assessments to encourage large GAs with 500 or more agents to voluntarily strengthen their internal control levels.
The evaluation focused on the control environment, control activities, and control effectiveness, and grades were assigned from 1 to 5 on a 100-point scale. The average across all entities was equivalent to grade 3. Compared to last year, when a pilot evaluation was conducted, the share of grades 1–2 rose slightly, showing a trend of partial improvement in internal control systems, it said.
Of the 75 companies in total, 29, or 38.6%, received grades 1–2; 24, or 32.0%, received grade 3; and 22, or 29.3%, received grades 4–5. The smaller the number of affiliated agents, the higher the share of weak internal controls. Among large GAs with fewer than 1,000 agents, 52% were graded 4–5, a higher level than the 30% or less for GAs with 1,000 or more agents, confirming a size-based gap.
By governance type, branch-type GAs had a 47.1% share of grades 4–5, higher than subsidiary-type and owner-type GAs. The Financial Supervisory Service analyzed that differences in results stemmed from the strength of organizational controls at headquarters.
By evaluation item, the control environment and control effectiveness were at grade 3, while control activities were the lowest at grade 4. IT system development and operation scored grade 5, the poorest, and compliance monitoring activities also emerged as areas needing improvement.
The Financial Supervisory Service said it plans to prioritize GAs with poor results as inspection targets. It also added that it will notify all GAs of their individual results and require them to submit improvement plans. The Financial Supervisory Service emphasized that even GAs with favorable evaluations need continuous supplementation, as some deficiencies were found in IT systems, inspections of frequent violations, and compliance monitoring activities.
The Financial Supervisory Service said it will gradually tighten evaluation criteria and apply differentiated assessments based on practical internal control outcomes, such as the level of IT system development and frequency of self-inspections. The Financial Supervisory Service said it will respond strictly by limiting reductions in fines and applying the highest level of sanctions if repeated legal violations occur due to lax internal controls.