June 24, 2021

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South Korea- Regulator announces plan to promote digital and contactless insurance sales

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, SEO, Wordpress Support & Insurance, Mortgage, Loans, Legal, Etc Blogs
, SEO, Wordpress Support & Insurance, Mortgage, Loans, Legal, Etc Blogs

The Financial Services Commission (FSC) plans to promote the use of digital, AI-based and contactless insurance sales mechanisms as part of a broader aim to boost consumer confidence and promote innovation in the insurance industry.

Insurance sales channels face structural changes amid an expansion of contactless services and digital technologies, an increasing number of platform businesses entering the market and the growth of general agencies.

To improve the effectiveness of consumer protection while removing some of the inefficiencies observed in the current insurance sales practices, the authorities have drawn up the following plan for insurance sales mechanisms:

A. Face-to-Face Sales

-Previously, insurance agents and brokers were required to meet customers face-to-face at least once to explain coverage details. However, with telemarketing safeguard measures in place, such as the requirements for recording and confirmation by insurers, sellers are allowed to provide explanations via telephone calls. (Rule change completed on 25 March 2021.)

-When subscribing for insurance coverage using a mobile phone, customers faced the inconvenience of having to put their signature multiple times throughout the process. This electronic signature requirement will be reduced to only once at the beginning of the subscription process to improve convenience.(Further improvements are expected within May 2021.)

B. Telemarketing

– With the use of text-to-speech AI-based technology, insurance agents and brokers will no longer have to read the entire sales script that usually took about 30 minutes to finish. With an AI-based voicebot, the salesperson is able to instead focus on answering questions from the customer and providing supplemental information. (Implementation expected in 3Q2021.)

– Previously, telemarketing and mobile sales mechanisms were two distinct sales channels. However, a hybrid sales mechanism mixing the two will be allowed to improve convenience for both sellers and consumers. (Implementation expected in 3Q2021.)

C. Quality Assurance

– After a sale, insurance companies make quality assurance calls or send out relevant emails or text messages to their customers to check whether the sales process was appropriate or not. To improve the effectiveness of quality assurance, the use of AI-based voicebots will be allowed with an exception for quality assurance calls made to elderly customers (those aged 65 and above). (Implementation expected in 3Q2021.)

D. Others

– The authorities are also considering allowing the use of video calls in selling insurance policies, with adequate consumer protection measures. (Implementation expected in 1H2021)

– Some insurers and FinTechs have submitted requests to turn the current telemarketing-only sales requirements into mobile mechanisms. After considering its potential, innovativeness as well as the level of consumer protection it guarantees, the authorities will decide whether to include this service into the financial regulatory sandbox programme. (1H2021.)

– The authorities will also consider drawing up a guideline on a standardised insurance sales script to ensure consumer protection and for more convenience.

Further action

The authorities will work to implement the measures swiftly by amending the relevant laws and taking immediate actions on measures that require no legislative change.

 

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