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InsurTech is composed of the words “insurance” and “technology”. It is used as a collective term for the application of modern technologies in the domain of insurance services.
Digital and mobile brokers: FinTechs belonging to this category mostly act as digital insurance brokers and provide users with an overview of their insurance contracts with their respective conditions. Some FinTechs offer very short-term insurance contracts to cover specific cases which can be concluded often spontaneously via mobile devices. Oftentimes additional consulting services are offered.
Internet of things: FinTechs belonging to this category collect data by measuring for example the driving style of the customers or through wearables the customers wear to consult on, offer and/or manage the customer’s insurances.
Introduction
Attitude of the country towards InsurTech-services
Recently, Korean insurance companies have been increasingly using InsurTech by collecting real-time data through sensors attached to objects such as wearable devices, developing new policies using such external data, and automating customer and business support system through chatbots using artificial intelligence. In particular, financial authorities have announced plans to vitalize healthcare services by linking insurance and health care, as healthcare services that combine both functions are expanding due to technological advances, such as the Internet of Things (IoT), big data, and platforms.
Provided, however, as mentioned above, financial authorities recently determined that the introduction of insurance policies and analysis of insurance coverage by online platforms were ‘brokerage services’. Accordingly, online platforms intending to provide such services must be registered as an insurance agency, but pursuant to the current Insurance Business Act, electronic financial business entities/MyData businesses cannot register as insurance agencies. Thus, the amendment of the enforcement decree of the Insurance Business Act is necessary in order for electronic financial business entities/MyData businesses to directly operate such services or to operate through a subsidiary registered as a general agency.
Legal affairs
Obligations and requirements to provide InsurTech-services
A business must register as an insurance agency in order to solicit insurance, and general agencies have requirements regarding experienced persons who have completed the training course and insurance solicitors, and at such time, an electronic financial business entity cannot register as an insurance agency for solicitation of insurances other than for simple liability insurance services.
The government is currently reviewing the option of amending the Insurance Business Act to allow electronic financial business entities to register as insurance agencies, and in connection with the same, partial amendments to the Insurance Business Act that permits the registration of electronic financial business entities as insurance agencies have been proposed to the National Assembly. Therefore, further updates are to be noted.
Additional comments regarding the legal situation for InsurTech-services or what InsurTech’s must be aware of in this business area
A business qualifying as an insurance agency must comply with not only solicitation regulations such as the prohibition of provision of special benefits, but also regulations regarding sales agent/broker of financial products under the Insurance Business Act.
Further, as an exception to the prohibition of provision of special benefits, 'health improvement insurance guideline' was drafted to support insurance policies focusing on health improvement that provides economic benefits (such as reduction of i