South Korea proposes stronger commission rights for insurers

South Korea’s legislative bodies are progressing with proposals that would empower major general agencies (GAs) to negotiate commission rates directly with insurers. The measures, submitted in August by the People Power Party and the Democratic Party of Korea, aim to permit qualifying agencies to register as “insurance sales specialist companies.” Should the legislation pass, it would mark the most substantial authority expansion for GAs since an earlier version of this proposal was rejected in 2008.

A distribution network with dominant market influence

The proposed commission provisions carry significant commercial implications given the sector’s scale. Agency channels currently represent about 48% of South Korea’s combined life and non-life insurance market by distribution share in 2025, according to estimates. The Korea Insurance Development Institute (KIDI) reported that non-life insurers alone had 28,916 registered agencies as of last year. Separate data from the Korea Life Insurance Association’s 2024 consumer survey revealed that 96.1% of life insurance policies were sold through direct agent interactions.

Many of these agencies have developed into major enterprises. Hanwha Life Financial Services, one of South Korea’s largest GA operators, reported KRW2.44 trillion in revenue for 2025, a 7.4-fold increase in five years. The company operates a network of 34,608 financial planners across its subsidiaries and is actively pursuing acquisitions and an initial public offering. This growth shows how GAs have transitioned from basic sales intermediaries into influential distribution platforms with substantial market leverage.

Expanded negotiating rights create competing market forces

Under the proposed framework, specialist companies would assume broader operational responsibilities, including contract administration, claims processing for customers, and handling smaller policy payouts. More critically, they would obtain formal authority to negotiate commission structures and business expenses with insurers across designated product lines. Industry observers have raised concerns that insurers might escalate commission bids to secure access to large GA networks, potentially concentrating market influence among the biggest operators while increasing distribution costs overall.

The legislation does not impose limits on commission levels or establish specific rules to prevent insurers from offering preferential terms to major agencies, but may allow for such terms as a result of the negotiation process. As a result, the proposed changes may disproportionately advantage established players, creating challenges for smaller agencies that lack comparable scale and bargaining power.

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Legal responsibility shifts to corporate entities

The Democratic Party of Korea’s bill, led by Min Byung-deok, would transfer primary liability for consumer-related harm during insurance sales from individual planners to the specialist company itself. Both proposals also mandate that these entities maintain minimum capital requirements, participate in insurance or mutual aid programs, and designate internal officers to oversee sales training, consumer protection, and compliance monitoring.

The Financial Services Commission (FSC) is simultaneously implementing reforms to reshape commission structures. Starting in July 2026, the regulator will apply its 1,200% rule to individual agents at GAs, capping first-year commissions at twelve times the monthly premium. From January 2027, new policies will transition to a four-year commission payment schedule, extending to seven years by 2029—a shift intended to incentivize agents to prioritize policy retention over acquisition.

Granting GAs formal commission-negotiating rights could move in the opposite direction of these regulatory changes, depending on how the negotiations are conducted. Neither bill explicitly resolves this conflict. South Korea is not the only jurisdiction addressing intermediary commission reform. In July 2025, Hong Kong’s Insurance Authority introduced a Practice Note restricting first-year commissions on participating long-term policies to 70% of total commissions, with the remainder distributed over at least five years, effective January 2026, according to legal firm DLA Piper.

The approaches highlight a key divergence: while Hong Kong seeks to curb upfront commission concentrations, South Korea’s proposed legislation could allow large GAs to negotiate commission terms, which may be higher in some cases. A nearly identical framework was proposed in 2008 but failed due to industry resistance and disputes over regulatory oversight, as reported by Chosun Biz.