An artificial intelligence (AI) joint venture pushed by the Korea Insurance Institute has drawn criticism from insurance industry officials, with questions raised over its legality and business rationale, according to officials, Wednesday.

Since Ha Tae-keung, the former lawmaker, took over as president in 2024, the institute has developed three AI-based education tools: a sales coach for training insurance agents, a system that generates questions for insurance qualification exams and an AI-powered learning experience platform.

The institute said that all questions on an insurance qualification exam held on Wednesday were generated by the AI system it developed.

It initially sought to establish a subsidiary to commercialize the technology, but the Financial Services Commission (FSC) did not approve amendments to its articles of association that would have provided a legal basis for the new entity and its investment. Ha subsequently shifted to a joint venture model.

The proposed venture would have 2.5 billion won ($1.77 million) in capital, with the institute and Taiwan-based WisdomGarden each investing 1 billion won, and Singapore’s X402 Labs contributing 500 million won.

Ha argued that the move had been legally vetted through a Ministry of Justice interpretation and Supreme Court precedents, which establish that nonprofit organizations can engage in for-profit activities when necessary to fulfill their stated objectives.

He also accused the FSC of changing its position on the venture and effectively blocking it. A board meeting scheduled for Aug. 7 to consider the investment and a supplementary budget for the new AI initiative was subsequently canceled, he said.

The FSC said it did not believe the matter warranted an official response.

“It’s not as though the FSC rejected an official application or explicitly prohibited the investment. We don’t think it would be appropriate for us to comment on the matter one way or the other,” an FSC official said.

The dispute, however, has drawn criticism from the union representing the country’s financial services workers, which called on Ha to “immediately stop pushing ahead with the project outside the law.”

The union explained that several of the institute’s member organizations, including the Korea Life Insurance Association and the General Insurance Association of Korea, had already opposed the venture over concerns about its commercial viability and the process used to push it forward.

Some industry watchers have questioned whether the institute should be commercializing AI technology at all. Given its mandate as a nonprofit organization focused on education and training for the insurance sector, they say the decision to create a separate commercial entity warrants scrutiny.

“Even if the institute wanted to develop a commercial business using AI, it should have first explained the project sufficiently to its member organizations and the regulator, and proceeded only after securing their understanding,” one industry official said.