Article 123 (Maintenance of Financial Soundness)
(1) Every insurance company shall adhere to the standards for financial soundness, which are set by Presidential Decree with respect to the matters falling under each of the following subapragraphs, to secure its ability to pay insurance money and the soundness of its management:
1. Matters concerning the appropriateness of capital;
2. Matters concerning the soundness of assets; and
3. Other matters needed to secure the soundness of management.
(2) In the case that any insurance company is feared to undermine the soundness of its management for its failure to adhere to the standards referred to in paragraph (1), the Financial Services Commission may order the relevant insurance company to increase its capital or its fund, and take necessary steps to limit its holding of shares and risky assets, etc.
under the conditions as prescribed by Presidential Decree. <Amended by Act No. 8863, Feb. 29, 2008>
Article 124 (Publication, etc.)
(1) Every insurance company shall publish without delay matters pre-
scribed by Presidential Decree as necessary to protect insurance policy holders under the conditions as prescribed by the Financial Services Commission. <Amended by Act No. 8863, Feb. 29, 2008>
(2) The insurance association established pursuant to Article 175 (here-inafter referred to as the “insurance association”) may compare and pub- lish matters such as insurance premiums, insurance money and the conclusion of insurance contracts, etc., which are prescribed by Presidential Decree, under the conditions as prescribed by the Financial Services Commission. <Amended by Act No. 8863, Feb. 29, 2008>
(3) The insurance association shall, when it compares and publishes the matters, set up the insurance products publication committee under the conditions as prescribed by Presidential Decree.
(4) Every insurance company shall provide the insurance association with information necessary to make the comparison and publication under paragraph (2).
(5) In the case that any person other than the insurance association com-pares and publishes matters concerning insurance contracts, such person shall compares and publishes such matters in an objective and fair man- ner under the conditions as prescribed by the Financial Services Commission under paragraph (2). <Amended by Act No. 8863, Feb. 29, 2008>
(6) The Financial Services Commission may, if it is deemed necessary to protect policy holders after finding the comparison and publication referred to in paragraph (5) are false or different in contents from the fact, demand that such comparison and publication be halted and corrective measures, etc. be taken. <Amended by Act No. 8863, Feb. 29, 2008>
Article 125 (Authorization of Mutual Agreement)
(1) In the case that any insurance company intends to enter into a mu- tual agreement with other insurance company to perform their joint act for their business, the insurance companies shall obtain authorization from the Financial Services Commission under the conditions as prescribed by Presidential Decree. The same shall apply to the case where they intend to alter or rescind such mutual agreement. <Amended by Act No. 8863, Feb.
29, 2008>
(2) The Financial Services Commission may, if it is deemed necessary to advance public interests and facilitate the sound development of the insurance business, order the relevant insurance companies to alter and rescind their mutual agreement, enter into a new mutual agreement or follow the part or whole of their mutual agreement. <Amended by Act No.
8863, Feb. 29, 2008>
(3) The Financial Services Commission shall, if it intends to authorize or order the conclusion, alteration or rescission of the mutual agreement under paragraph (1) or paragraph (2), consult thereabout with the Fair Trade Commission in advance. <Amended by Act No. 8863, Feb. 29, 2008>
Article 126 (Report on Alteration of Articles of Incorporation)
In the case that any insurance company intends to alter the articles of incorporation, such insurance company shall make a report to the Financial Services Commission in advance: Provided, That the same shall not apply to the case where it intends to alter any minor matter prescribed by Presidential Decree. <Amended by Act No. 8863, Feb. 29, 2008>
Article 127 (Report on Alteration of Basic Document)
(1) In the case that any insurance company intends to alter the basic document, such insurance company shall make a report to the Financial Services Commission in advance. <Amended by Act No. 8863, Feb. 29, 2008>
(2) Notwithstanding paragraph (1), in the case that contents intended to alter in the basic document are in conformity with the standards set by the Financial Services Commission under the conditions as prescribed by Presidential Decree, such contents intended to alter may be quarterly submitted to the Financial Services Commission in lieu of the report referred to in paragraph (1). <Amended by Act No. 8863, Feb. 29, 2008>
(3) Procedures for and methods of making the report and submitting the contents intended to alter in the basic document under paragraphs (1) and (2) and other necessary matters shall be prescribed by Presidential Decree.
Article 128 (Confirmation of Alteration of Basic Document)
The Financial Services Commission may, if it is deemed necessary, require the report on the alteration of the basic document to go through the confirmation of the Financial Supervisory Service when it receives the report on the alteration of the basic document, etc. under Article 127.
<Amended by Act No. 8863, Feb. 29, 2008>
Article 129 (Principles for Calculating Premium Rates)
Every insurance company shall calculate its premium rates based on objective and rational statistical data, prevailing principles and statis- tical credibility, and observe the matters falling under each of the fol- lowing subparagraphs:
1. Premium rates are required not to be too high compared with insur- ance money and other payments;
2. Premiums rates are required not to be low to the extent that they greatly undermine the financial soundness of the insurance com- pany; and
3. Premium rates are required not to be unfairly discriminatory among policy holders.
Article 130 (Matters to be Reported)
When any of the following causes occurs, an insurance company shall report to the Financial Services Commission within five days from the date when such cause occurred: <Amended by Act No. 8520, Jul. 19, 2007; Act No. 8863, Feb. 29, 2008>
1. When it changes its firm name or title;
2. When it appoints or dismisses any officer;
3. When it suspends or resumes the business of its principal office;
4. When the majority shareholder has been changed;
4-2. When there is a change in the number of stocks held by large share- holders as many as 1/100 or more of the total voting shares; or
5. When it faces important influence on the performance of its busi- ness, which is prescribed by Presidential Decree.
Article 131 (Right of Financial Services Commission to Issue Orders)
(1) In the case that any insurance company’s inappropriate operation of the business and the poor state of its assets are feared to undermine the rights and interests of policy holders and the insured, etc., the Financial Services Commission may order the relevant insurance company to take the measures falling under each of the following subparagraphs: <Amended by Act No. 8863, Feb. 29, 2008>
1. Change in the methods of performing the business;
2. Deposit of assets in any institution designated by the Financial Su-pervisory Commission;
3. Change in the book value of assets;
4. Holding of the reserve to prepare for unsound assets;
5. Writeoff of assets as losses, which are deemed to be valueless; and 6. Other necessary measures prescribed by Presidential Decree.
(2) In the case that any insurance company is feared to greatly under- mine public interests, the protection of policy holders and the sound management of any insurance company due to a change in its business, the state of its assets and circumstances or its basic document is deemed to violate Acts and subordinate statutes or carries contents disadvantageous to policy holders, the Financial Services Commission may order such
insurance company to alter the basic document or suspend its use after holding a hearing: Provided, That in the case that the Financial Services Commission order minor matters of the basic document changed, such hearing may not be held. <Amended by Act No. 8863, Feb. 29, 2008>
(3) In the case that the Financial Services Commission deems it necessary to protect the interests of policy holders, the insured and any person entitled to receive insurance money when it orders the basic document altered, the Financial Services Commission may have the effect of such change extended to insurance contracts to be concluded in the future. <Amended by Act No. 8863, Feb. 29, 2008>
(4) Notwithstanding paragraph (3), in the case that policy holders, the insured and any person entitled to receive insurance money are deemed to suffer disadvantages without doubt due to the basic document, the
alteration of which is ordered under paragraph (2), the Financial Services Commission may have part of the insurance premiums already paid for concluded insurance contracts refunded and order the insurance money increased. <Amended by Act No. 8863, Feb. 29, 2008>
(5) Every insurance company shall, when it is subject to the order referred to in paragraph (2), publish a summary of such order under the condi- tions as prescribed by Presidential Decree.
Article 132 (Application)
The provisions of Article 131 (1) shall apply mutatis mutandis to every local office, every insurance agency and every insurance brokerage com- pany. In this case, the “insurance company” shall be deemed the “local office”, the “insurance agency” and the “insurance brokerage company”, respectively.
Article 133 (Submission of Material and Inspection, etc.)
(1) The Financial Supervisory Commission may order any insurance com- pany to submit the roll of current shareholders, report the business and submit material related to the performance of the inspection provided for in this Act for the protection of public interests and policy holders, etc.
<Amended by Act No. 8863, Feb. 29, 2008>
(2) Every insurance company shall undergo the inspection conducted by the Financial Supervisory Service with respect to its business and the current state of its assets.
(3) The Governor of the Financial Supervisory Service may, when it is deemed necessary to conduct the inspection referred to in paragraph (2), ask any insurance company to report its business and assets, submit ma-
terials and make any person concerned appear to state his opinion.
(4) Any person who conducts the inspection under paragraph (2) shall carry a certificate showing his authority and produce it to persons con- cerned.
(5) The Governor of the Financial Supervisory Service shall, when he conducts the inspection in accordance with paragraph (2), take neces- sary measures depending on the findings of the inspection and report the findings of the inspection to the Financial Services Commission. <Amended by Act No. 8863, Feb. 29, 2008>
(6) The Governor of the Financial Supervisory Service may ask any ex- ternal auditor appointed by any insurance company in accordance with the Act on External Audit of Stock Companies to furnish information he has learned as a result of his audit of the insurance company and submit materials related to the management soundness of the insurance com- pany. <Amended by Act No. 8520, Jul. 19, 2007>
Article 134 (Sanctions against Insurance Company)
(1) The Financial Services Commission may, if any insurance company is feared to be unable to run soundly its insurance business in violation of this Act or orders issued under this Act, take the measures falling under each of the following subparagraphs on the recommendation of the Governor of the Financial Supervisory Service or get the Governor of the Financial Supervisory Service to take the measure of subparagraph 1: <Amended by Act No. 8863, Feb. 29, 2008>
1. Caution and warning to the insurance company or caution to officers and employees of the insurance company;
2. Order given to correct the act of violation;
3. Recommendation for the dismissal of any officer and demand for the suspension of his office; and
4. Partial suspension of the business for not more than six months.
(2) The Financial Services Commission may, when any insurance company falls under any of the following subparagraphs, order its business suspended in whole for the fixed term of not more than six months and revoke the license of its insurance business after holding a hearing: <Amended by Act No. 8863, Feb. 29, 2008>
1. When it has obtained the license of its insurance business by means of false and illegality;
2. When it has violated contents or terms of the license;
3. When it has run its business during the business-suspension term;
and
4. When it has failed to execute the corrective order given under para- graph (1) 2.
Article 135 (Notice of Measure Taken Against Retired Officer, etc.)
(1) In the case that an officer or an employee who has retired or resigned from any insurance company, if he still works for such insurance com- pany, would have been subject to the measure taken in accordance with Article 134 (1) 1 and 3, the Financial Services Commission may get the Governor of the Financial Supervisory Service to inform the head of the relevant insurance company of contents of such measure. <Amended by Act No. 8863, Feb. 29, 2008>
(2) The head of the relevant insurance company shall, upon receiving the information referred to in paragraph (1), inform the relevant officer or the relevant employee of the fact, and enter and keep the fact in the re- cord of personnel administration.
Article 136 (Application)
(1) The provisions of Articles 133 and 134 shall apply mutatis mutandis to every local office, every insurance agency and every insurance bro- kerage company. In this case, the “insurance company” shall be deemed the “local office”, the “insurance agency”, and the “insurance brokerage company”, respectively.
(2) The provisions of Article 133 shall apply mutatis mutandis to any subsidiary that runs the business closely related to the insurance busi- ness, which is prescribed by Presidential Decree. In this case, the “insur- ance company” shall be deemed the “subsidiary”.
(3) The provisions of Article 133 shall apply mutatis mutandis to any person who is entrusted with the business closely related to the insur- ance business by any insurance company, which is prescribed by the Presidential Decree. In this case, the “insurance company” shall be deemed the “entrusted person”.