FSS Urges Insurers to Self-Regulate Broadcast Ads, Citing High Rates of Elderly and Incomplete Sales

The Financial Supervisory Service (FSS) has called on the insurance industry to strengthen internal controls and disclosures regarding broadcast advertisements that stimulate consumer anxiety.

On October 1, the FSS held a meeting with the Korea Life Insurance Association, the General Insurance Association of Korea, major insurers running broadcast ads, and 13 home shopping general agency (GA) corporate insurance agencies to discuss measures to soundly manage broadcast advertising for insurance products.

Kim Wuk-bae, Deputy Governor for Consumer Protection, stated in his opening remarks, "Consumer damage continues due to unsound sales practices within the insurance sector recently," emphasizing, "Since internal screening by insurance companies serves as the first line of defense against false and exaggerated advertisements, please strive to prevent consumer damage by strengthening internal reviews."

According to the FSS, the proportion of elderly consumers and the rate of incomplete sales among customers who signed up through broadcast advertisements were significantly higher than those through other channels.

In fact, the proportion of subscribers aged 70 or older acquired through broadcast ads stood at 13.4%, which is approximately double that of other channels (7.4%).

The incomplete sales rate for broadcast advertising contracts was also 0.036%, roughly three times that of other recruitment channels (0.012%).

However, over the past five years, there has been only one disciplinary action (a warning) issued against home shopping insurance advertisements.

In response, the FSS pointed out that the current disciplinary threshold for the incomplete sales rate (0.4%) far exceeds the industry average (0.03%), indicating a need to lower the disciplinary standards.

Given the limitations of relying solely on post-screening by associations to prevent issues—due to the live nature of home shopping broadcasts—the FSS called for reinforcing disciplinary tools and overhauling internal controls so that consumer protection departments can directly participate from the advertisement production stage.

Furthermore, the FSS requested that the Life and General Insurance Associations strengthen their broadcast advertising screening criteria to prevent deceptive broadcast ad cases that could mislead consumers.

It also mandated the expansion of broadcast advertising disclosures, including the frequency and duration of broadcasts for each insurance company and the advertising review status of each association.

This measure reflects criticisms that transparency has been lacking because associations currently disclose only disciplinary facts related to broadcast advertisements.

The FSS stated, "We will continue to communicate with the industry so that high-quality broadcast advertisements that align with the status of the insurance industry and the level of consumer awareness can be delivered," adding that it will step up monitoring alongside the life and general insurance associations to eradicate unsound sales practices.

(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.