The fee overhaul for insurance agents pushed by the financial authorities will be submitted to the Regulatory Reform Commitee (RRC) for a full review this week. The general agency (GA) industry, which opposes the fee overhaul, is mounting an all-out effort to lower the regulatory level, including submitting an opinion letter to the RRC. The financial authorities expect the overhaul to pass the RRC without major revisions.
According to the financial sector on the 9th, the RRC will hold a meeting this week to conduct a full review of the insurance agent fee overhaul being pursued by the Financial Services Commission (FSC). The full review is expected to be held on the 12th. In a preliminary review last month, the RRC evaluated the sales fee overhaul as a "major regulation" and decided to take it up in the full review.
The core of the fee overhaul is shifting insurance sales practices, which were centered on "signing insurance contracts," to a focus on "maintaining insurance contracts." Key elements include: ▲ expanding installment payment of fees ▲ overhauling the sales commission execution framework ▲ mandating comparative disclosures and comparative explanations ▲ applying the 1,200% rule to GA-affiliated agents.
The 1,200% rule is a regulation that caps the commissions an agent receives within one year after a contract at 1,200% of the monthly premium. It has so far applied only to agents exclusively affiliated with insurers, but will be expanded to agents affiliated with GAs. As the insurance sales market has recently reorganized around GAs, the impact is expected to be significant.
According to the Financial Supervisory Service, as of the end of last year, there were a total of 288,446 insurance agents affiliated with GAs, more than the 184,468 agents exclusively affiliated with insurers.
Starting in 2027, installment payment of fees will be implemented in stages. Agents have sold insurance products and received commissions in a lump sum over one to two years. Beginning in 2027, this will be paid in installments over up to seven years in stages. The financial authorities expect the fee overhaul to pass the RRC's full review.
The GA industry is calling for regulatory improvements, arguing that the fee overhaul would sharply reduce agents' income. The GA industry is said to have submitted an opinion letter containing these points to the RRC with agents' signatures. It also asked for a six-month grace period for the application of the 1,200% rule, pushing the start from next July. If the RRC accepts the GA industry's views, it can issue a recommendation for improvements to the Financial Services Commission (FSC).