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Insurers seek to expand to banking services

Amid low interest rate margins, banks are increasingly moving toward a complex financial store system, incorporating additional functions such as securities and insurance, starting from August.

To consumers, this means a convenient one-stop channel to arrange their financial issues. But to nonbanking operators, it may result in an infringement on their conventional business fields by large-sized banking groups. To counter the handicap, insurers are now seeking to provide banking services.

Insurers filed a petition to the Financial Services Commission on Wednesday, asking for permission to sell bank services such as deposits, installments and loans, according to industry officials.

The expansion of bank functions through the financial store system has been initiated in order to revitalize the stalled financial market and to promote user convenience. Currently, Shinhan Life Insurance and NH Life Insurance are gearing up to open such in-bank counters.

The FSC said that the current bancassurance rule, which imposes a 25 percent ceiling on the banks’ sales of insurance, will continue to be in effect, and also pledged to crack down on illicit sales practices at bank offices.

Despite these protective measures, however, independent insurers not affiliated with banking groups claim the new rule will lead to a market monopoly by large financial groups.

It remains to be seen whether insurers will benefit from selling bank products.

“If insurers actually succeed in selling bank products in a considerable deal, that may create a commission fee profit, as intended,” said an official of a leading life insurance company.

But having fewer branch offices than major banks, insurers have more limited access to new customers, he explained.

“Also, banks customers may easily be talked into subscribing to an insurance policy, but this doesn’t happen the other way around as people tend to make their own judgment when it comes to opening an account or taking a bank loan.”

By Bae Hyun-jung (
catch table
Korea Herald daum