South Korea’s Financial Services Commission (FSC) has approved changes to insurance business supervisory regulations that will gradually extend the payout period for insurance sales commissions to as long as seven years and link a larger share of remuneration to policy maintenance.
Under the revised framework, taking effect in stages, commissions for insurance agents will shift away from being heavily concentrated in the first policy year. From January next year, commissions on new business will be split into an upfront payment and a maintenance commission paid in instalments over four years. This transitional four-year schedule will be in place for two years. Beginning in January 2029, the instalment period will be lengthened to seven years. The FSC said a maintenance commission payable over up to seven years will be added to the existing upfront commission, with the maintenance portion paid only while the contract remains in force.
According to The Asia Business Daily’s report, an FSC official said: “From January next year, the four-year instalment payment will be implemented for two years, and from January 2029, the seven-year instalment payment will be introduced.” The official added that a long-term maintenance commission will be paid in policy years five to seven so that “the longer an agent maintains a contract, the higher the total commission they can receive.” Under the new structure, the total commission amount will rise in line with the duration for which the agent keeps the policy active.
The amendments also broaden the application of South Korea’s “1,200% rule,” which caps first-year commissions at 12 times the monthly premium. Currently, the cap applies to commissions that insurers pay to corporate general agencies (GAs). From July, it will also apply to commissions that GAs pay to their affiliated individual agents, bringing agent-level payments under the same first-year limit. To address incentives linked to high upfront commissions, the FSC will extend the ban on arbitrage activities from one year to the full duration of the insurance contract. The measure is intended to limit practices such as repeated policy replacement designed to generate new initial commissions over short periods. In addition, both upfront and maintenance commissions paid by insurers to agents will need to remain within the acquisition cost allowances set at the product design stage. This ties agent remuneration to predefined cost parameters and may require insurers to reassess product pricing, commission scales, and distribution budgets together.
Alongside the commission changes, the FSC is introducing new disclosure and governance requirements for insurers and large GAs. Starting in March, the Insurance Association will be required to compare and publish sales commission rates by product category on its website. The disclosures must separate upfront and maintenance components, allowing stakeholders to see how commission structures vary by product line and over time. GAs with more than 500 agents will assume additional duties at the point of sale. When recommending products, these GAs will need to provide consumers with a list of products available from their affiliated insurers and explain the commission grade and ranking of any product being recommended. For distributors active in multiple Asian markets, these steps may resemble emerging disclosure practices elsewhere that seek to clarify how remuneration may influence product selection.
The role of insurers’ product committees will also change under the reforms. The FSC plans to strengthen these committees so they oversee the process from product development through distribution. Membership will include executives responsible for products, compliance officers, and senior managers in charge of financial consumer protection. These committees will review product operation plans, the appropriateness of business expense levels, profitability analysis, and the risk of misspelling. For groups with existing regional or global product governance standards, the Korean requirements may need to be incorporated into broader oversight frameworks. An FSC official said: “We expect this commission restructuring to normalize insurance contract retention rates,” and indicated that consumer harm linked to policy replacements is expected to fall, while agents may be able to build more stable income. The official also said insurers and GAs are expected to see higher agent retention and more stable sales channels as contract retention improves.
The commission overhaul is taking place as South Korea’s general insurance market continues to expand, with regulatory changes, demographic shifts, and evolving customer needs shaping business lines and premium growth. GlobalData projects that general insurance direct written premiums (DWP) in South Korea will increase from KRW33.7 trillion (US$25.1 billion) in 2025 to more than KRW39.1 trillion (US$29.1 billion) by 2029. This represents a compound annual growth rate (CAGR) of 3.8% over the period. For 2025 alone, GlobalData expects DWP growth of 2.8%, with liability premiums rising as corporations respond to tighter compliance and risk management expectations.
Health and personal accident insurance are also forecast to grow, supported by regulatory oversight from the FSC and the Financial Supervisory Service (FSS), and by an aging population that is increasing demand for medical and long-term care coverage. Swarup Kumar Sahoo, senior insurance analyst at GlobalData, said motor, liability, and health-related products are likely to remain central to the sector’s expansion. “The revival in vehicle sales and tightening regulations, including data protection regulations, have collectively triggered demand in these lines. Heightened health following the COVID-19 pandemic continues to drive private health insurance growth, with longer waiting times in the public healthcare system and rising medical costs pushing consumers further toward health products,” he said.
The life insurance segment is expected to grow somewhat faster than general insurance over the next several years. According to GlobalData, life DWP in South Korea is projected to rise from KRW188.2 trillion (US$140.2 billion) in 2025 to KRW234.3 trillion (US$174.4 billion) in 2030, implying a CAGR of 4.5% between 2025 and 2030. Growth in 2025 is estimated at 3.8%, supported by demand for health-related life products, pensions and protection-oriented covers. For insurance professionals in Asia, South Korea’s move to lengthen commission payout periods, extend the 1,200% cap to GA agents, increase disclosure, and formalize product governance provides a detailed case study of how intermediary incentives, policy retention, and consumer outcomes are being addressed through regulation in a major regional market.
