Financial consumers will be able to take out insurance at complex financial branches ― hybrid financial service centers that incorporate banking and securities operations.
Regulators hope that such an integrated format may maximize synergy for the financial industry, which is struggling with low interest rates, but independent insurers claimed it would only benefit large banking groups.
The Financial Services Commission said Friday that it would run a test operation on including insurance companies in complex financial branches, starting August.
The test run, however, is to be limited to a maximum period of two years and three branches per financial company, so as to abide by bancassurance regulations.
Currently, banks are allowed to sell insurance, but only to a ceiling equal to 25 percent of the group’s total assets ― a rule designed to protect small and mid-sized insurers from banking groups’ dominance.
Also, insurers will have to place themselves in a separate space within the complex financial branch, as the insurance industry law states that each financial sector must be separated from one another.
But concerns persisted, especially from independent insurance firms, that employees at these complex branches may actually get around the 25 percent ceiling rule by handing over their insurance customers to their affiliates.
The FSC will maintain the test run period until 2017, after which it will reconsider whether or not to expand the system to the entire industry.
“By incorporating insurance operations, these complex branches will offer a wider variety of choices to customers and also boost synergy among individual businesses,” said a regulatory official.
“We are, however, aware of the possible side effects such as a downsizing of the insurance planners’ job market, so we have limited the length and range of our test operation.”
By Bae Hyun-jung (tellme@heraldcorp.com)