By Na Jeong-ju
Staff Reporter
Chief executives of banks called on political parties to go ahead with a plan to allow sales of more insurance policies at bank branches, prompting an angry response from insurance companies.
The action came after Rep. Lee Hahn-koo, head of the policy committee of the largest opposition Grand National Party, said the party will vote for a bill aimed at suspending the expansion of bancassurance. The government has opened the door wider for banks to handle insurance sales at their outlets after initiating the plan in 2003.
Currently, banks are allowed to sell savings-type insurance only. Under the fourth-stage of bancassurance scheduled for April, however, banks will be able to sell non-savings-type insurance such as whole-life insurance or policies covering critical illnesses and automobile insurance.
Large insurance firms have demanded the government drop its plan to expand the system, saying it only represents the interests of banks. In contrast, banks have called for a faster implementation of bancassurance.
``It is deeply regrettable that some politicians are discussing the suspension of bancassurance,'' the bank CEOs said in a statement released after their meeting in Seoul. The statement was signed by Yoo Ji-chang, head of the Korea Federation of Banks, and 15 CEOs of commercial, state-owned and province-based lenders.
``Their move contrasts the next government's plan to remove barriers in the financial industry and its ambitious goal of growing the industry into a new economic growth engine,'' the statement said.
It raised concerns that some politicians are trying to solve the disputes over bancassurance with the logic of politics, saying the country's global reputation will be seriously hurt if parties block the fourth-stage.
``Since bancassurance arrived here in 2003, insurance firms have created more than 4,000 jobs and the industry has become more competition-oriented. Customers also can buy policies at cheaper prices now,'' the statement said. ``It is a global trend to get rid of barriers between the financial sectors. Bancassurance is bringing benefits to insurance firms, customers and banks.''
In response to the statement, an association of insurance sales outlets announced a statement of their own, calling for an action by political parties to scrap it.
``Financial regulators have sided with banks in the course of expanding bancassurance, although such policy has raised uncertainties about the insurance market,'' the association said. ``What we want is an immediate abolishment of it, not its suspension or delay. Regulators should take it seriously that banks have increased illegal or inappropriate sales of insurance policies at their branches.''
Banks and insurance firms are expected to raise their voices further until lawmakers begin reviewing the bill aimed at suspending bancassurance at a National Assembly session next month.