Financial authorities are set to release their first comprehensive supervision plan at a "reform level" targeting insurance agencies (GAs), which have grown larger than insurance companies. While super-large GAs with over 10,000 affiliated designers and annual sales in the trillions of won are shaking up the insurance market, financial authorities lack adequate means to apply the brakes. The authorities plan to raise sanction standards for GAs to the level of insurance companies and will generally prohibit indiscriminate cross-business operations.
According to financial authorities on the 22nd, the Financial Services Commission and the Financial Supervisory Service have begun preparing a historic comprehensive supervision plan for GAs. As channels selling products from multiple insurance companies, GAs employ 316,000 affiliated designers, far surpassing the 224,000 exclusive designers of insurance companies. There are four GAs with annual sales exceeding one trillion won.
While insurance companies pour tens of trillions of won in annual sales commissions to become "super-gab" (overwhelmingly powerful clients) for GAs, the internal control levels of GAs and the financial authorities' sanction regulations remain stuck at 10 years ago. Operating in a management blind spot, GAs have recently been involved in a series of major incidents, including illegal lending brokerage, illegal private finance youth victimization, tampering with policy funds, and fraudulent receipt of medical benefits.
Financial authorities are considering significantly raising sanction standards for GAs, such as business suspensions, to the level of insurance companies. Currently, under the Financial Supervisory Service's inspection and sanction regulations, a GA can only be suspended if the proportion of accident amounts in total sales (operating revenue) exceeds 1-2%. Proposals include lowering this ratio or introducing new standards based on accident amounts. For large GAs, whose total sales have surged into the trillions, business suspension sanctions are practically impossible under current sentencing guidelines.
For example, Incar Financial Services, the industry's second-largest player, saw its sales grow nearly tenfold from 120 billion won in 2015 to 1.02 trillion won in 2025. To impose a two-month business suspension on this company, the accident amount would need to exceed 20 billion won today, compared to 2.4 billion won a decade ago. The Financial Supervisory Service explains that even deploying inspection personnel year-round makes business suspension of large GAs realistically difficult.
Similar to insurance companies, measures are being pursued to ban employees from working for a certain period if they commit violations while employed at a GA. Insurance company executives who face sanctions are barred from re-employment for five years, whereas GAs have no tracking system and no separate regulations restricting re-employment. Even if a sanctioned GA is shut down and only its signboard is changed to operate under a new company name, financial authorities remain powerless while the GA continues to employ staff.
In response to recent incidents, "octopus-style" cross-business operations will also be curbed. GAs are not subject to separate industry restrictions under current laws, except for multi-level marketing and lending businesses. Consequently, incidents have occurred where high-priced insurance products are forcibly sold or illegal acts are encouraged under the guise of consulting services such as tax, accounting, and labor management. Additionally, financial consulting services other than "cash or gifts" will be included in "special benefits," and providing amounts exceeding a certain threshold will result in penalties. Currently, only cases where cash or gifts are provided based on the smaller of 10% of the first-year insurance premium or 30,000 won are subject to punishment.
Restrictions on business names will also be introduced. Signs such as "~Asset" or "~Finance" displayed by GAs in major commercial districts like Gangnam, Seongsu-dong, and Yeongdeungpo in Seoul will be removed. Regulations will be strengthened to require the term "Insurance Agency" to be explicitly included in business names, similar to insurance companies, lending firms, and mutual financial institutions. The aim is to prevent confusion with other financial businesses.
A financial authority official stated, "Although insurance agencies have become super-large compared to insurance companies, financial authorities lack effective sanction measures, and insurance companies controlled by GAs are spending business expenses without brakes." The official added, "We are determined that if the future of insurance is at stake, we will prepare a comprehensive supervision plan at a reform level to prevent leaving GAs unchecked."
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