South Korea Insurance Industry – Governance, Risk and Compliance

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South Korea Insurance Industry Regulation Overview

The Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) regulate the Spain insurance industry along with other regulators and supervisors, including the International Regulatory Authority (IAIS), Korea Life Insurance Association (KLIA), and the General Insurance Association of Korea (GIAK).

The South Korean insurance industry governance regulation research report provides a detailed analysis of the regulations for several insurance types including life, property, motor, and liability. The report also gives insights into recent and upcoming changes in non-admitted insurance regulations, taxation, and the legal system. Also, leverage our elaborate procedural review of new company registrations and operations based on key parameters such as license, FDI, minimum capital requirements, and solvency to better understand market avenues.

Key Regulators ·       Financial Services Commission (FSC)

·       Financial Supervisory Service (FSS)

·       International Regulatory Authority (IAIS)

·       Korea Life Insurance Association (KLIA)

·       General Insurance Association of Korea (GIAK)

Compulsory Insurances ·       Motor third-party liability insurance

·       Marine Liability Insurance

·       Professional Indemnity Insurance

·       Social Security Insurance

Key Taxes ·       Tax on Insurance Premium

·       Corporate Income Tax

·       Corporate Capital Gains Tax

·       Value Added Tax

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South Korea Insurance Industry – Key Regulators and Legislation

Financial Supervisory Service (FSS): The FSS is an independent constitutional body responsible for the supervision, control, and regulation of operations of insurers, reinsurers, and intermediaries. It also conducts the registration and authorization of insurance intermediaries to enable the operation of insurance mediation activities in the country.

International Association of Insurance Supervisors (IAIS): The IAIS is a membership-driven global organization representing insurance regulators and supervisors. It formulates and issues various global insurance principles, standards, and guidance, provides training and support on issues related to insurance supervision and organizes meetings and seminars for insurance supervisors. The IAIS works closely with other financial sector standard-setting bodies and international organizations to promote financial stability.

A few of the legislation governing the South Korean insurance industry are:

  • Insurance Business Act (as amended in 2020)
  • Enforcement Decree of the Insurance Business Act
  • Insurance Business Supervisory Regulations
  • Korean Commercial Code 2015
  • Act on the Establishment of Financial Services Commission

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South Korea Insurance Industry - Compulsory Insurance

A few of the compulsory insurances required within the South Korean insurance industry are:

  • Motor third-party liability insurance
  • Marine Liability Insurance
  • Professional Indemnity Insurance
  • Social Security Insurance

Compulsory Insurance in South Korea

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South Korea Insurance Industry - Company Registration and Operation

A license is required to operate in the South Korean insurance industry. The FSC supervises and regulates the establishment of an insurance company under the guidelines outlined in the Insurance Business Act and the Enforcement Decree of the Insurance Business Act. Furthermore, large shareholders must obtain prior approvals from the FSC to hold stakes in an insurance company. Large shareholders are defined as shareholders possessing 10% or more of the total issued and outstanding voting shares of an insurance company. FSC approves large shareholders to acquire stakes in an insurance company if they meet financial soundness and certain other requirements including nationality and the type of proposed shareholder.

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South Korea Insurance Industry – Taxation

Tax is imposed upon insurance premiums within the insurance industry in South Korea. The other taxes imposed are corporate income tax, corporate capital gains tax, and value-added tax.

Corporate Income Tax: The National Tax Service administers and supervises the taxation in the country under the Corporate Income Tax Act, Personal Income Tax Act, Value Added Tax Act, International Tax Coordination Law, and Local Tax Act. These Acts are responsible for achieving an effective, efficient, transparent, and taxpayer-oriented tax administration in the country. The Taxation Act comprises the rules and regulations on taxation in the country.

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Scope

  • The report covers details of the insurance regulatory framework in South Korea.
  • The report contains details of the rules and regulations governing insurance products and insurance entities.
  • The report lists and analyzes key trends and developments pertaining to the country’s insurance regulatory framework.
  • The report analyzes the rules and regulations pertaining to the establishment and operation of insurance businesses in the country.
  • The report provides details of taxation imposed on insurance products and insurance companies.

Key Highlights

  • The Financial Supervisory Commission and the Financial Supervisory Service regulate the South Korean insurance industry.
  • Composite insurance is not permitted in South Korea. However, both life and non-life insurers can carry on accident and health insurance business.
  • 100% FDI is permitted in the South Korean insurance industry.
  • Motor third-party liability insurance, fire, and liability insurance for buildings are the key mandatory classes of insurance in South Korea.
  • Non-admitted insurance is permitted for life and reinsurance business in South Korea.

Reasons to Buy

  • Get FAQ-style analytical insights comprising 129 knowledge elements on insurance compliance applicable to the country.
  • Gain insights into the insurance regulatory framework in South Korea.
  • Track the latest regulatory changes and expected changes impacting the South Korea insurance industry.
  • Gain detailed information about the key regulations governing the establishment and operation of insurance entities in the country.
  • Understand key regulations and market practices pertaining to various types of insurance products.

Table of Contents

South Korea

Legislation Overview

Supervision and Control

Legislation

Compulsory Insurance

Non-Admitted Insurance Regulations

Company Registration and Operation

License

Foreign Direct Investment / Ownership

Minimum Capital Requirements

Solvency Margins

Reserve Requirements

Statutory Return Requirements

Fee Structure

Taxation

Tax on Insurance Premium

Corporate Income Tax

Corporate Capital Gains Tax

Value Added Tax

Legal System

Policy Practice

About GlobalData

Contact Us

Table

South Korea – Corporate Tax Rates for the Financial Year 2023

Figures

List of Figures

Figure 1: South Korea – Insurance Supervision and Control at Various Levels

Figure 2: South Korea – Insurance Regulatory Frameworks for Company Registration and Operation

Frequently asked questions

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