As financial crimes involving employees of corporate insurance agencies (GAs) continue to surface, police launched an investigation after receiving a complaint alleging that Park, 39, who worked as a branch manager at Korea Insurance Finance, stole about 300 million won by luring victims with high-interest insurance products.
According to police on the 3rd, the Seongnam Sujeong Police Station in Gyeonggi is investigating based on six fraud complaints filed against Park, the former branch manager for the Songpa-gu area in Seoul at Korea Insurance Finance. Park is accused of deceiving six acquaintances between July and August by saying that if they signed up for an annuity insurance product, 5% of the paid premiums would be paid as interest, and then taking their money.
At the time, Park explained that the money would be a rebate of the sales commission Park would receive and asked them to sign up for only 100 days. After taking money from the victims, Park did not actually enroll them in an annuity insurance product. Park is also said to have delivered forged insurance certificates to the victims during the enrollment process. Korea Insurance Finance terminated its contractual relationship with the branch Park operated after identifying the allegations in September.
GAs have grown rapidly in recent years by comparing and selling products from various insurers, but weak internal controls have led to a series of financial crimes. The Financial Supervisory Service released in March that it had caught a large GA and affiliated planners involved in a lending company Ponzi scheme. According to the Financial Supervisory Service's inspection, GA-affiliated planners at Mirae Asset Financial Services and PS Pine Service promised high returns to 765 policyholders and raised 140.6 billion won, then failed to repay 34.2 billion won. The total number of people involved in the illegal deposit-taking reached 371.
While traditional insurers manage directly through company-run branches, GAs can operate as branches by simply contracting with sole proprietors who oversee a few planners, drawing criticism for weak internal controls. Even when problems arise, they often avoid responsibility by merely terminating the contract with the branch. As a result, oversight of planners is lax, leading to improper sales, critics say.
According to the results of the "2024 internal control status assessment of large corporate insurance agencies (GAs)" released by the Financial Supervisory Service on the 26th of last month, more than half (52%) of large GAs with fewer than 1,000 affiliated planners were rated grade 4 (vulnerable) or grade 5 (risky) in internal controls. Also, compared with subsidiary-type (20%) or owner-type (13.6%), branch-type GAs had a higher proportion of grade 4 and 5 at 47.1%. An organization with 500 or more affiliated planners is classified as a large GA.
The branch type is an organization formed by an alliance of branches or outlets. The subsidiary type is where an insurer that outsources solicitation to a GA holds equity, and the owner type is where the head office controls branch management. A Korea Insurance Finance official said regarding the filing of the complaint, "We have completed the process of removing Park from the post and have also closed the branch."