The financial regulator will check Samsung Life Insurance Co. over its rebate policy, after the local police caught a wealthy man dodging taxes by allegedly hiding the money with the help of insurance brokers, regulatory officials said Tuesday.

The No. 1 insurance firm in South Korea will be inspected over whether it has made sure its insurance planners have not offered policyholders any rebates or incentives that exceed the legal limit, officials at the Financial Supervisory Service (FSS) said.

There are approximately 35,500 insurance brokers working with Samsung Life Insurance, of which about 50 planners manage insurance policies of some 50 wealthy people whose contracts are worth more than 5 billion won ($4.73 million), the FSS added.

The FSS inspection came as the police found two insurance brokers involved in an alleged tax evasion worth 40 billion won by a local businessman, only known by the last name Lee, from 2005 till last year.

The brokers, whose names weren't released, are accused of giving expensive grafts worth hundreds of millions of won to Lee's wife in return for buying some 400 insurance policies that they had been selling at that time.

The brokers are suspected of splitting the 40 billion won of Lee's assets into the 400 insurance contracts to stash it away from the tax authorities, since they were all tax-exempt products.

The FSS intends to focus its preliminary inspection on the insurer's internal control over its brokers in relation to rebate provisions, sales practices and any financial mishaps.

The regulator said it chose Samsung Life Insurance as the first subject for the preliminary inspection because it is the largest insurer and will give them a general idea of the current sales trend in the field.

If any irregularities are found in the rebate policies, the FSS is considering expanding its inspection into other insurance firms in an all-out scale, it said. (Yonhap News)