SEOUL, Jan. 2 (Korea Bizwire) — Twice as many exclusive licenses for insurance products were handed out in 2017 compared to the year prior, a record breaking number.
The surge in what are essentially insurance product patents was caused by two factors: the implementation of International Financial Reporting Standard 17 (IFRS17), and the government’s modification of the rules governing the insurance industry two years ago.
These changes to the insurance industry fomented a need for new and diverse products and fostered an environment that allowed firms to develop and introduce new insurance plans to market more freely.
According to the Korea Life Insurance Association and General Insurance Association of Korea, 33 exclusive licenses were issued last year, breaking the record of the most issued set by the 15 that were granted in 2016.
Since the year of its inception, fewer than 10 exclusive licenses per year were attained until 2016.
Also record-setting were the 39 applications made last year, beating out the former record of 20 in 2016. A total of 25 of the applications were from the life insurance sector, and 21 were approved.
Prior to 2015, insurance firms’ products were required to be registered with the Financial Supervisory Service. This arrangement led to greater regulation than intended, inhibiting continued innovation in the market. The government’s 2015 “Insurance Industry Roadmap for Improved Competitiveness” allowed firms to register their products after their release rather than before.
The authority to grant executive licenses rests with both the Korea Life Insurance Association and the General Insurance Association of Korea. The licenses reward creative insurance firms that develop new and unique products by barring other firms from selling the licensed products for a designated period of time.
The maximum valid duration of executive licenses was extended from six months to one year in 2016.
An insider at the Korea Life Insurance Association said, “Following the implementation of rigorous financial soundness standards like IFRS17, firms are actively engaging in development of new products with a focus on creativity to gain a distinct competitive advantage.”
Lina Jang (firstname.lastname@example.org)