The proposed deregulations in the existing financial bill will infuse life in the dwindling insurance sector of South Korea. Not only the insurance companies, but also customers will get benefit from it.
The Finance Minister of South Korea had announced deregulation proposals for insurance sector on December 27, 2007. The proposals would help insurance companies to grow and expand their services in the domestic market. Today, South Korea insurance market is the seventh largest market in the world in terms of premium, as per the news published by Reuters.
According to the Finance Minister, the proposals would help in enhancing asset management options, which, in turn, encourage insurers to invest in the long-term market for bonds.
The announcement of deregulation proposals is following the parliamentary approval of the Capital Markets Integration Act in July 2007. It will ease down the regulations applied on financial institutions and investment products. Moreover, it will also help to consolidate dwindling financial sector.
The amended bill will get approval of the parliament in the first half of this year and will be implemented from February 2009. The bill will empower customers to pay their insurance premiums, receive insurance money, or pay utilities bills through their insurance accounts.
The insurers will give total financial services to customers. Moreover, customers will get advices regarding investment from insurers and insurers will manage their assets as wrap accounts products, which are currently sold by securities companies.
The new proposals for changes in the existing financial law include relaxing rules on non-bank financial holding companies. It will make easier for insures to invest in or buy other financial firms. Beside, it would also simplify the regulations in asset management, which help insurers to invest freely in derivatives and foreign currency assets. Also, deregulation will give more scope to insurers to offer new insurance products and to diversify sales channels.
However, the biggest drawback in the proposed changes is that it does not permit insurance companies to operate life insurance and non-life insurance businesses simultaneously. The finance minister believes that it is incoherent with global standards. On the other hand, non-life insurance companies are protesting against it.
According to a report “South Korean Insurance Industry Analysis (2007)” by RNCOS, till few decades back, the insurance sector in the country showed tremendous growth opportunity but its growth rate has slowed down. The government policies restricted the growth of the local players. Now the government is taking every possible step to liberalize the entire financial services sector because of pressure from foreign lands.
Related Market Research Reports:
Retirement Solutions Market in US
Russian Insurance Industry Forecast to 2010
Sharia Banking System in Indonesia
