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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] The Financial Supervisory Service (FSS) announced on the 26th that nearly one in three large insurance general agencies (GAs) received “weak” or “high-risk” ratings in its latest internal control assessment. The regulator warned it will prioritize these firms for inspections next year and impose strict sanctions for violations.
The FSS evaluated internal control practices at 75 large GAs with more than 500 affiliated insurance planners. This marks the first full-scale implementation of the assessment system, which had been operating on a pilot basis since 2022. The GA evaluation grade differs from the integrated management assessment used for financial institutions.
According to the results, 29 firms (38.6%) received Grades 1 and 2 (excellent/good), while 24 firms (32.0%) received Grade 3 (average). However, 22 firms (29.3%) were rated Grade 4 or 5 (weak/high-risk), highlighting a significant polarization in internal control capabilities.
Weaker GA ratings were concentrated among smaller firms and those operating under a branch-type structure. Among GAs with fewer than 1,000 planners, 52% received Grade 4 or 5. Meanwhile, 80% of the 20 largest GAs—those with more than 3,000 planners—received Grades 1 or 2, and none received Grades 4 or 5.
By governance structure, 47.1% of branch-type GAs were rated Grade 4 or 5—significantly higher than owner-led (13.6%) and subsidiary-type (20%) GAs. Branch-type organizations operate on a decentralized, independent-profit model, making centralized control more difficult and increasing internal control blind spots.
The FSS plans to tighten sanctions to encourage GAs to strengthen their internal control systems.
For GAs that commit repeat violations, fines above ten times the statutory amount will no longer be subject to mitigation. Intentional or organized violations will trigger the highest level of penalties. Insurance planners who incur administrative fines more than twice may also face unmitigated disciplinary measures, including suspension.
The FSS added that these assessment results will also impact insurers' third-party internal control risk evaluations, putting additional pressure on low-rated GAs to improve.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
