Legal issues in transactions of insurance products through online platforms of Big Tech

Abstract

Business of Big Tech companies in financial area is recently accelerated by such methods as sales and brokerage services of insurance products through online platforms, etc. Digital platform phenomenon next to Pin Tech is expected to play positive functions to enhance competitiveness of financial business by increasing efficiency and capacity of finance, reducing consumers’ searching costs, and expanding options. However, on the other hand, such a phenomenon may cause problems in consumer protection because financial stability is reduced and identification of responsible entities due to complex digital transactions. Especially, as financial business gives large influence to national economy and launch and operation of financial business is strictly regulated in the aspect of public character of financial business, if Big Tech companies launch their business in financial business through cooperation with general financial companies, they may avoid regulation and supervision of financial business and reverse discrimination of existing financial companies may be caused. Therefore, it is required to provide a frame of regulation for transactions of insurance products of Big Tech platform companies. A solution to such issues is rational regulation with establishment of the standard on application of Insurance Business Act in relation to operation of insurance business of Big Tech companies. Whether an action of a Big Tech company belongs to advertisement of products only or belongs to brokerage or sale of insurance products should be individually and concretely judged and, furthermore, should be judged based on recognition levels of consumers. If advertisement by a Big Tech company is not limited to simple advertisement but actively participates in brokerage including comparison of insurance products and, if consumers trust the Big Tech company and consider such action as brokerage or sale of insurance products, responsibility under Insurance Business Act may be imposed on such company. Also, although it is asserted that the commissions received by a Big Tech company are simple advertisement costs, if brokerage is done through participation of Big Tech at certain level, such action may be considered as brokerage and application of Insurance Business Act is possible. That is, regulations on mediation, brokerage, agency of insurance products under Insurance Business Act should be applied to advertisement of insurance by Big Tech companies depending on level of participation.