South Korean financial authorities will be easing entry regulations to allow more boutique brokerage and specialty insurance services in the country.
Under the outline released by the Financial Services Commission and the Financial Supervisory Service on Wednesday, capital requirements will be lowered for insurance and brokerage houses focusing on specialty and customized retail services to widen consumer choices.
Under current domestic law, an insurance company needs at least 30 billion won ($27.8 million) and a permit to start a business.
Seoul authorities have benchmarked Japan’s insurance industry. The country has made it considerably easier for small insurance firms to open up shop as they only need a starting capital of 10 million yen ($91,000), one-hundredth that required of their larger peers, to register with the regulator.
FSC Vice Chairman Kim Yong-beom. [photo by Financial Services Commission]
The government hopes the deregulation would broaden the insurance market with shops selling specific products like reinsurance, pensions and policies for pets or travelers.
A similar approach has been taken on the securities front to foster more niche financial players. Brokerage-specific firms that serve only as intermediaries and do not engage in direct transactions can now start their business with a simple registration and a minimum capital of 1.5 billion won, half of the previous threshold.
Capital requirements for one-person investment advisory firms have also been lowered, from 800 million won to 250 million won for consultancy services and from 2.7 billion won to 1.5 billion won for investment services.
By Kim Dong-eun and Kim Hyo-jin
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]