(Seoul=Yonhap Infomax) Yun Gu Lee – South Korea's large general agencies (GAs), or corporate insurance agencies, received an overall 'average' rating for their internal control systems in 2023.


According to the Financial Supervisory Service's (FSS) "2024 Internal Control Assessment of GAs" released on the 26th, 75 major GAs—each with more than 500 affiliated insurance planners—scored an average grade of 3 (average) on a five-tier scale.


The grading system is as follows: a score of 90 or above is Grade 1 (excellent), 80 or above is Grade 2 (good), 70 or above is Grade 3 (average), 60 or above is Grade 4 (weak), and below 60 is Grade 5 (high risk).


Last year, 29 agencies (38.6%) achieved Grades 1 or 2, 24 agencies (32.0%) received Grade 3, and 22 agencies (29.3%) fell into Grades 4 or 5.


Internal control performance varied by agency size. Among large GAs with fewer than 1,000 planners, 52.0% were rated in Grades 4 or 5, compared to 30.0% for those with more than 1,000 planners. Conversely, among the 20 GAs with over 3,000 planners, 16 (80.0%) achieved Grades 1 or 2, while 4 (20.0%) received Grade 3.


Branch-type GAs—where branches operate independently under a joint revenue model—were more vulnerable, with 47.1% rated in Grades 4 or 5. This contrasts with subsidiary-type GAs (20.0%), where insurers hold equity stakes, and owner-operated GAs (13.6%). The results indicate that the level of headquarters oversight over branches significantly impacts internal control outcomes.


Within the assessment categories, the 'control environment and effectiveness' averaged Grade 3, but 'control activities' lagged at Grade 4, suggesting that while frameworks exist, actual internal control practices remain insufficient.


The FSS will notify each GA of its results and require submission of improvement plans, prioritizing inspections of underperforming agencies. The regulator also plans to gradually enhance the assessment process to ensure GAs meet internal control standards comparable to financial institutions, and will strictly sanction legal violations as they arise.


yglee2@yna.co.kr


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