Twice as many exclusive licences for insurance products were handed out in 2017 as in the previous year, breaking records.
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, reports Korea Bizwire.
These changes to the insurance industry have fomented a need for new and diverse products and fostered an environment that allows insurers to develop and market new insurance plans more freely.
According to the Korea Life Insurance Association and General Insurance Association of Korea, 33 exclusive licenses were issued last year, breaking the previous record of 15 that was made in 2016. Previous to 2016, fewer than 10 exclusive licences per year were approved.
Also record-setting were the 39 applications for exclusive licences lodged last year, beating 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 licences rests with both the Korea Life Insurance Association and the General Insurance Association of Korea. The licences 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 licences was extended from six months to one year in 2016.