By Yoon Ja-young
Staff Reporter
Insurance companies will be allowed to set up subsidiaries or acquire businesses freely on overseas markets. The measure aims at encouraging local insurers to advance into the overseas market.
``Korea's insurance market is the seventh largest in the world, yet we don't have a single insurer equipped with global competitiveness,'' said Financial Services Commission Chairman Jun Kwang-woo at a meeting with insurance CEOs in downtown Seoul Wednesday.
Jeon said the commission would touch up regulations to help insurers grow and to give them more strategic choices in management.
He said they should actively advance into overseas markets and promised to help them, adding insurers will be allowed to hold unlimited stakes in their overseas subsidiaries. Currently, an insurer's total stake in its subsidiaries should not be more than 60 percent of equity capital or 3 percent of total assets. Though introduced to prevent insurers from recklessly expanding businesses with customers' money, the regulation made it very difficult for local insurers to set up subsidiaries or acquire businesses abroad.
He added that insurers will be allowed to run investment advising or entrusting businesses. Currently, insurers can invest only in allowable derivatives product under Korean law, which hampered them from effectively managing their assets. The chairman said that to combat this a negative system would be adopted instead, allowing them to invest in any legal derivate product, unless prohibited by law.
``Consumer trust is the most crucial basis for developing the insurance industry,'' Jeon said, asking insurers to focus on protecting customer rights instead of pursuing short-term profits.
Insurance CEOs suggested that private health insurance be activated and asked for systemic support from the commission, including allowing private insurers to share health records of individuals with the National Health Insurance.