Banks Protest Suspension of Bancassurance
By Na Jeong-ju
Staff Reporter
Chief executives of banks on Thursday blasted a National Assembly decision to suspend the government's plan to allow sales of more insurance policies at bank branches, saying the decision contradicts the Constitution.
They called on the next government to go ahead with the scheme to remove barriers between insurance firms and banks and allow banks to sell more insurance policies.
The action came days after a subcommittee of the Assembly's Finance and Economy Committee agreed to stop the government's bancassurance plan, which was initiated in 2003.
Currently, banks are allowed to sell savings-type insurance only. Under the fourth-stage of bancassurance, originally scheduled for April, however, banks would have been able to sell non-savings-type insurance such as whole-life insurance or policies covering critical illnesses and car accidents.
``So far, we have prepared for the fourth-stage of the program by hiring more staff and building systems,'' the bank presidents said in a statement, following a gathering at a Seoul hotel. ``The decision to suspend the bancassurance is not in line with the Constitution and could hurt the credibility of government policies.''
The statement was signed by Kookmin Bank CEO Kang Chung-won, Shinhan Bank CEO Shin Sang-hoon, Hana Bank CEO Kim Jong-ryul, Industrial Bank of Korea CEO Yoon Yong-ro and 11 other CEOs of commercial and state-owned lenders.
Banks invested 16.9 billion won in 2005 to build systems for insurance sales. In preparation of the fourth-stage bancassurance, banks spent 5.6 billion won on improving computer systems and educating salespeople, according to the statement.
``We hope the next government will push for bancassurance,'' it said.
Large insurance firms had demanded the government drop its plan to expand the system, saying it only represents the interests of banks. In contrast, banks had called for faster implementation.
``Since bancassurance began here in 2003, insurance firms have created more jobs and the industry has become more competition-oriented. Customers also can buy policies at cheaper prices now,'' said Yoo Jie-chang, head of the Korean Confederation of Banks.
Insurers, however, said policymakers had sided with banks in the course of expanding bancassurance, although the policy raised uncertainties about the insurance market.