Starting next year, consumers will be able to compare commission rates for insurance products on the life and non-life insurance association's website.
On the 1st, the Financial Services Commission announced a reform plan for insurance sales commissions containing this information. From January next year, the life and non-life insurance associations are required to disclose the commission rates on their websites to allow for comparisons. The ratios of upfront commissions and maintenance commissions will also be itemized and made public.
The obligation for insurance planners to explain products will also be strengthened. If a planner belonging to a large insurance agency (GA) with more than 500 employees explains insurance products to consumers, they must detail the commission grade for each product. Additionally, they are required to provide a list of insurance companies that can enter into contracts and must include the products of the insurance company chosen by the consumer in the comparison.
The prospect is that excessive insurance switching will be curtailed. The upfront commissions consumers pay to planners will be limited to within 100% of the contract signing costs. Instead, maintenance commissions will be paid to planners for up to 7 years, increasing the incentive for long-term insurance contracts. The newly established maintenance commissions can be paid at a rate of up to 0.8% of the contract signing costs annually.
Additionally, starting next year, if an insurance company excessively uses business expenses, it may become subject to institutional sanctions. A 1200% rule will apply to the commissions paid to planners by the GA.
The Financial Services Commission plans to amend insurance supervisory regulations during the third quarter of this year to reform sales commissions. The commission expects that this reform will improve the retention rate of insurance contracts and increase customer satisfaction with contracts.