The current Act prescribes that when executives and employees of an insurance company or an insurance agency cause damage to a policyholder, the insurance company is liable for compensation. The Act also prescribes prohibited acts regarding the conclusion or solicitation of an insurance contract by a person engaged in such activities and imposes penalty surcharges or administrative fines for a violation.

Currently, however, an insurance company’s scope of liability for compensation regarding solicitation is limited to cases where it has caused damage to a policyholder, and it has been pointed out that penalty surcharges and administrative fines are not enough to prevent damage that occurs when executives and employees of an insurance company or an insurance agency fail to comply with their obligations regarding prohibited acts.

Therefore, this proposal aims to expand an insurance company’s scope of liability for compensation regarding the conclusion or solicitation of an insurance contract to include damage caused to a policyholder or an insured, and introduce a punitive compensation system where a violation of an obligation regarding prohibited acts with respect to the conclusion or solicitation of an insurance contract gives rise to liability for compensation not exceeding five times the amount of damage, thereby improving the effectiveness of provisions regulating the acts of persons engaged in the conclusion or solicitation of an insurance contract and substantially protecting against damage to a policyholder or an insured (Article 102).

Liability for Compensation of Insurance Companies (Article 102)