Legislation Trend and Task for Legal Status of Insurance Solicitor in Korea

Abstract

Since liberation of 1945, passing through social confused stages of Korean War, the insurance business has laid foundation for its growth of Korea. It was really hard to find consumers who lived from hand to hand and identify the need to buy insurance policy. In these poor environments, the organizations of insurance solicitors(“ISs”) have made enormous contribution to the development and growth of life insurance market in Korea. ISs, through inducement and invitation to offer as intermediary, make insurance contracts concluded and this has been a cause of legal disputes for the reason that their right to represent insurance companies is not recognized in reality. In particular, legal stability of intermediary action of ISs is not secured and the problem of damages on policyholder therefrom is seriously arisen. Due to the nature of insurance, people engaging in insurance solicitation ask consumers to buy insurance policy and fulfill the duties to conclude contracts in practice, there are many cases where policyholders consider ISs as insurance companies themselves. For instance, there are many instances where material facts are not delivered to insurance companies, even though the policyholder clearly informed those facts. This is because the IS has no right to receive notices. In March of 2014, limited right to receive premium and right to issue insurance policy certificate of IS were newly added to the Korean Commercial Act, insurance contract law. However, it is doubtful that those newly added provisions are effective because: the provisions of IS state in the manner that rights of insurance agencies are limited; term of ‘IS’ is not to be expressly used; no provision grants ISs the right to receive notices. Considering their important role in insurance solicitation practices, it is necessary to recognize ISs' rights to receive notice to the extent that the insurance contract has less room for contract parties to intervene that contract on their discretion. In addition, it is also necessary to impose obligations to provide information or explain to insurance consumers so that they can clearly identify the authorities and rights of IS. On the other hand, an IS enters into a commission contract with the insurance company to which he or she belongs and there are many cases where the IS takes unfair treatment from that insurance company in the course of fulfilling his or her duties. Currently, the Insurance Business Act prohibits unfair conduct of insurance companies such as non issuance of commission contract or violation of provisions of that contract and makes those companies comply with those provisions through voluntary rules of their associations. However, there is a limitation on the effectiveness when: the types of unfair conduct against IS are described in each subparagraph of Article 29-3 of the Enforcement Ordinance of the Insurance Business Act (Act); and the unfair conduct of those companies are to be prevented through the autonomous rules of the associations. Accordingly, in July of 2014, proposed partial revision bills of the Act prepared by the National Policy Committee of the National Assembly prescribes those unfair conduct in subparagraph 1 through 3 of Article 85-3 (1) of the Act. However, in order to secure effectiveness of those provisions, it is necessary to explore the plan to punishment such as imposition of fines in case of violations of those provisions prohibiting unfair conduct. Likewise, any matter related to unfair conduct of insurance companies is related to the contractual relationship between those companies and ISs and the existence of direction or orders of those companies for ISs to be recognized as employees. At present, a proposed bill requiring to expressly describe people working in special types including IS as employees in the statutes including the Labor Standards Act is been discussed. Its essential content is to recognize people working in special types as employees in order to protect the rights and interest of them including IS. The provision defining “workers” in LSA must be revised to include those people and relevant labor related laws and regulations such as the Industrial Accident Insurance Act must be revised. As the revision of labor related laws and regulations are not a matter of simple revision of laws but requires overall improvement of legal system, which asks us to discuss in depth. For instants, it is necessary to adopt the way to protect the rights and interests of IS through revision of individual law such as “compulsory buying an industrial disaster insurance” in the IDIA. So long as this is necessary action for establishing relevant business purpose, it is reasonable to impose equal responsibility to employers regardless of the contractual forms.