By Park Hyong-ki
Staff Reporter
Non-insurance companies such as banks, brokerages and mutual savings banks reaped over 10 trillion won in sales of bancassurance for the first time since its introduction in 2003.
According to the Financial Supervisory Service, such financial firms posted a combined income of 10.4 trillion won from bancassurance sales in the fiscal year between April 2007 and March 2008, up 35 percent from a year earlier.
The revenue accounts for about 10 percent of the total income posted by life and non-life insurers, the regulator noted.
The government introduced legislation in 2003, allowing non-insurance companies to sell insurance policies at their retail branches, in an effort to help banks and securities companies secure new income sources.
Currently, they are only allowed to sell savings-type insurance products.
As of March this year, some 110 financial firms, including 16 banks and 20 brokerages, have sealed deals with insurance companies to market and sell bancassurance.
The regulatory body noted that banks have been the most active financial firm selling bancassurance as their income from the sales of the savings-type insurance accounted for 98 percent of 10.4 trillion won in total.
Securities companies are the second biggest seller of bancassurance with sales income taking up 1.5 percent.
Meanwhile, the regulator said it will continue to monitor banks and their insurance affiliates whether they are unfairly marketing bancassurance and other types of insurance policies such as variable life insurance.
Customers have complained that banks had forced them to subscribe to insurance products in return for extending their loans.
Last year, the Korea Life Insurance Association said that 22 percent of policy buyers at banks signed contracts in return for getting loans. The association surveyed 2,004 bancassurance customers, around half of whom cancelled their subscriptions later.