Washington–U.S. insurance interests are urging the nation's trade representatives to push Korea for an agreement giving them access to that country's $65 billion insurance market.

The American Insurance Association in Washington said in a letter that U.S. negotiators should work to improve the transparency and consistency of Korea's insurance regulatory system as they craft a free trade agreement.

Talks on the proposed U.S. Korea Free Trade Agreement are scheduled to begin in early June, and the stakes are high for U.S. insurers.

With over $65 billion total premium volume, South Korea is the world's eighth-largest insurance market and would be the largest market included in a free trade agreement.

“Our member companies consider the Korea FTA our highest new negotiating objective,” stated AIA President Marc Racicot in a letter sent to U.S. Trade Representative Rob Portman by the AIA and the American Council of Life Insurers.

“Through good faith and commercially meaningful negotiations, our member companies believe we can increase our market share in Korea as we have done in Japan,” the letter said.

In addition to offering their support for an agreement, the AIA and ACLI also outlined several priorities designed to improve the regulatory environment in Korea for U.S.-based insurers.

Although the market was technically opened to U.S. companies by a 1986 agreement, Korea's regulatory structure has effectively barred foreign companies from gaining more than a minimal market share in the country.

“Because of Korea's unique business barriers and discriminatory practices, we believe this FTA will have to include new disciplines specific to the realities of the Korean legislative, legal and regulatory system,” Mr. Racicot said in the letter.

Among the main priorities would be increasing the separation between Korea's Financial Supervisory Service and Korean trade groups.

Foreign-based companies are currently barred from joining Korean trade associations, to which the FSS delegates some rule-making authority. In their letter, the AIA called on ensuring that the decisions by Korean trade associations should be explicitly defined as advisory.

Additionally, the AIA called on negotiators to press for some structural changes to the Korean regulatory system, including clarifying the dispute resolution adjudications system, codifying foreign currency reserve rules and changes from a “positive” approach in which regulators outline what is acceptable practice for companies to a “negative” approach that says what practices are prohibited.

“We strongly support the FTA with Korea because of its economic and commercial significance to both nations,” said Mr. Racicot. “We stand ready to lend every support to U.S. negotiators working to make this a successful agreement for our two nations.”

David Snyder, vice president and assistant general counsel at AIA, said that the association believes a final agreement needs to include all of the outlined priorities, although he acknowledged that “some are obviously easier than others.”

He mentioned that changing from a “positive” to “negative” regulatory system is something insurers have secured in prior agreements with other nations.

“All of these are doable and all of these are important for both Korea and the United States to have a competitive, financially viable market,” he said.