The Financial Services Commission said Tuesday it will draft a policy framework this month to allow local platform operators, including Naver and Kakao, to enter the insurance market to expand customer access to digitized financial products.

Under the envisioned plan, the financial regulator will ease the current regulations to enable the internet companies to develop and sell micro insurance products, in accordance with its “sandbox” program. The regulatory framework is aimed at temporarily lifting regulations to test-run new technologies or promising ventures.

“It is expected that more platform operators will attempt to offer insurance services, while traditional insurance companies seek business partnerships with digital platforms. The entry of platform operators into the local insurance market will induce market competition and greater consumer choice of insurance products,” the FSC said in a statement. 

The FSC‘s latest decision came after Kakao Pay, the nation’s No. 1 mobile payment service provider, had applied to the authority earlier this month for a license to run a digital non-life insurance business.

To prevent an uneven playing field between insurance firms and their tech rivals, the FSC will conceive a regulatory system designed to impose sanctions on platform companies’ abuse of market dominance.

Further details on the proposed scheme will be announced later this month.
Meanwhile, the FSC has vowed to foster technology-led insurance businesses, or “insurtech” companies.

“The percentage of digital channels of automobile insurance products rapidly grew to 21.1 percent of the total online market share from 2 percent estimated in 2005. (The FSC) will promote measures to spur the growth of online-only insurance firms,” a FSC official said.

To strengthen consumer protection, the FSC has also pledged to develop an index through which consumers can easily compare complex insurance products scattered in the market. 

By Choi Jae-hee (cjh@heraldcorp.com)