Five Major Relaxations for Insurance Agencies Effective by End of September: Exemption from Recording for Elderly, Legalization of OIU Referral Fees

The Financial Supervisory Commission (FSC) announced today (9th) the proposed amendment to the regulations governing insurance agencies. After reviewing the latest guidelines on solicitation, underwriting, claims, and related procedures, five key revisions have been introduced. These include relaxing the scope of care calls, legalizing referral fees for Offshore Insurance Units (OIU), and establishing an exemption mechanism for elderly policyholders from audio-visual recording and follow-up calls. Currently, 14 life insurance companies have already submitted their consumer protection measures for review. The FSC aims to enhance policyholder convenience while safeguarding consumer rights and injecting new momentum into the industry. If no objections are raised during the 60-day public comment period, the new regulations could be implemented as early as the end of September.

Key Point 1: Precise Targeting of Care Calls

Under current regulations, when insurance agencies and banks conduct care calls for clients who purchase insurance using loans or who surrender existing policies to buy new ones ("surrender and repurchase"), the term "client" has led to both policyholders and insured individuals being contacted in practice.

The revised regulations, aiming for legal consistency, now clearly define the target of care calls as "policyholders and those who actually pay the premiums," explicitly excluding the insured. Chen Ching-yuan, Deputy Director of the Insurance Bureau, explained that whether a policyholder uses loans, fixed deposit withdrawals, or policy loans to purchase insurance is not directly related to the insured person's rights. This change will significantly streamline unnecessary call procedures.

Key Point 2: Exemption from Recording and Follow-up Calls for Elderly Policyholders

Current regulations require audio-visual recording of the sales process and post-sale follow-up calls for all policyholders aged 65 and above, regardless of individual circumstances. Recognizing that most elderly individuals still possess strong cognitive abilities, the revised regulations introduce an "exemption clause."

In the future, insurance agencies and banks may be exempt from sales recording, video recording, and post-sale follow-up calls for elderly clients, provided they follow the "customer policyholder rights protection measures" submitted and reviewed by their partner or agent insurance companies.

Chen revealed that 14 life insurers have already submitted their consumer protection measures to the regulatory authority, and reviews are underway. He emphasized that until formal approval is granted, companies must continue to comply with current recording and follow-up requirements.

Key Point 3: Simplified Procedures for Wealth Management Products for High-Net-Worth and Elderly Clients

To support life insurers in offering wealth management services, the amendment clarifies that if insurance agencies and banks follow the solicitation control measures submitted or approved by their partner insurers, they may be exempt from applying elderly-specific rights protection measures when selling insurance products to high-net-worth clients. Additionally, when assisting high-net-worth clients with "premium financing secured by insurance policies," they may be exempt from the care call requirements for loan-funded insurance purchases. This will significantly shorten the processing time for wealth management services targeting affluent clients.

Key Point 4: Legalization of Referral Fees for OIU (Offshore Insurance Unit)

To support insurers in attracting foreign clients to purchase Offshore Insurance Unit (OIU) products and to expand the development of OIU branches, Article 49 has been amended. Insurance agencies that receive or pay referral fees for OIU business referrals will no longer be considered in violation of prohibited acts.

Chen provided an example: suppose a Taiwanese insurance agency partners with a Malaysian advisory firm that refers foreign clients interested in Taiwan's OIU products for wealth management purposes. Under previous regulations, commissions could only be paid to actual solicitors, and listing referral fees in accounting records was illegal. After the amendment, insurance agencies can legally pay referral fees to overseas partners. Since both policyholders and insured individuals in OIU business are located overseas and clearly separated from the domestic market, regulators have assessed that this will not disrupt the domestic insurance market order.

Key Point 5: Prohibition of Dual Roles for Insurance Agency Staff

To promote sound operations and clarify gray areas in business cooperation, the amendment explicitly states that personnel employed by insurance agencies (such as administrative staff or sales supervisors) may not register as insurance agents for insurance companies or other insurance agencies, unless they meet the exceptions outlined in Article 14 of the Insurance Agent Management Rules.

Chen frankly stated that there have been reports of individuals serving as internal staff or sales supervisors at insurance agencies while simultaneously being registered as agents at life insurance companies. If the two companies have business partnerships, this could easily lead to conflicts of interest. The amendment will clearly prevent such misconduct.

Additionally, the FSC has adjusted the regulatory structure by moving provisions previously located in the "Penalties" chapter (original Article 60) regarding the qualifications, appointments, and mandatory removal of responsible persons to Chapter 5, the "Management" chapter, as the newly added Article 49-1.

Chen explained that responsible persons have a profound impact on consumer rights and should be held to higher ethical standards. Previously placed in the penalties chapter, these provisions were largely declarative. By moving them to the management chapter, regulators can now more smoothly require companies to rectify or impose administrative penalties under Article 167-2 of the Insurance Act if an insurance agency appoints a responsible person who fails to meet the required qualifications, thereby enhancing the legal enforceability of daily supervision.