The Financial Supervisory Service advised corporate insurance agencies (GA; General Agency) to refrain from listing exaggerated terms when advertising for entry-level planners, according to reports. Recently, some GAs have reportedly posted job ads offering substantial training stipends to recruit entry-level planners who do not fall under the so-called "1200% rule," but are said to claw back the funds if certain performance levels are not met. The Financial Supervisory Service appears to view that this could later lead to improper sales of insurance products due to planner attrition and therefore issued the related advisory.
On the 7th, according to the financial authorities, the Financial Supervisory Service conveyed this to industry officials during the "system stabilization task force (TF)" that has been under way since the 1200% rule took effect. The TF includes the Financial Supervisory Service (FSS), the Korea Life Insurance Association, the General Insurance Association of Korea, and the GA Association.
The 1200% rule, implemented on Jul. 1, limits the first-year commission paid to planners (including settlement support funds) to within 12 times the monthly premium. It was introduced to curb practices in which planners, driven by excessive commission competition, quickly solicit contracts and then leave or engage in unsound sales, and to raise policy retention rates. However, newcomer activity support payments to planners with no recruitment experience in the past three years are excluded from the 1200% rule if certain conditions are met.
In response, GAs are shifting strategy from hiring high-efficiency veteran planners with high commissions to securing and developing entry-level planners. Some GAs are reportedly recruiting entry-level planners by promising training stipends of around 10 million won upon joining. However, it is said that if the company's required sales performance is not achieved later, a portion of that amount must be returned.
Recently, the Financial Supervisory Service has tightened oversight to stabilize the system, issuing stern warnings to some GAs to stop paying commissions indirectly through low-interest loans, merchandise prizes, and the like. An official at the Financial Supervisory Service (FSS) said, "We have asked some GAs to strengthen internal controls related to job advertisements."