This study analyzed the defaulted mutual fund cases in Korea and suggests mutual fund insurance scheme such as deposit insurance scheme. Commercial banks play a role of the distribution channels of defaulted mutual funds. In theory, commercial banks in the indirect financial market sell bank deposit and security brokerage companies in the direct financial market do mutual funds. In practice commercial banks sell bank deposit and mutual funds to bank customers. When commercial banks sells mutual funds, commercial bank customers do not distinguish the possibilities of default between bank deposit and mutual funds. The agency structure of mutual funds is that fund managers (agents) instead of fund investors (principals) make an investment decision as if a bank decides which company is lended from depositors’ money. In the view of agency theory, fund investors plays a role of principal and bank does a role of agent. The conflict between bank and fund investors in the defaulted mutual fund cases implies the agency cost. To reduce the agency cost, this study suggests mutual fund insurance scheme. Since the deposit insurance scheme has moderated the agency cost between bank and bank depositor, the mutual fund insurance scheme can reduce the agency cost between bank and fund investors. If the mutual fund insurance scheme is adopted, commercial banks are expected to play a role of fund investors and then the agency cost between bank as an agent and fund investors as owners is reduced.