By Park Hyong-ki
Staff Reporter
Banks will have to compensate insurance policy buyers for losses arising from unfair sales of insurance products, the Financial Supervisory Service (FSS) said.
The Ministry of Finance and Economy is seeking to revise the insurance industry law in line with the plan to expand bancassurance businesses, allowing banks to sell insurance products.
The amendment is expected to put more weight on financial firms to conduct fair practices of selling insurance products.
``The Ministry of Finance and Economy is looking into the matter for possible revisions,'' said an official of insurance supervision department at the FSS.
Under current regulations, insurers have to pay damages to customers who were cheated into buying faulty insurance products at banks.
Banks are allowed to sell savings type insurance policies, and sales of insurance have become big income sources for lenders. With the expansion plan, they soon will be able to sell other types of policies such as whole-life insurance and auto insurance.
The insurance industry has been objecting to the plan, as thousands of industry workers will lose jobs once banks expand their sales of policies.
Besides banks, securities companies and mutual savings banks have been selling insurance products since August 2003 when bancassurance was adopted to help boost insurance sales and income source for banks and non-banks.
The official said the idea of revision came after the Korea Insurance Development Institute held a meeting last August on ways to improve bancassurance and equally hold banks and insurance firms responsible in insurance sales.