Geumsoyeon: "Contract Arbitrarily Terminated After Insurance Claim... Bad Practice"

[Asia Economy Reporter Oh Hyung-gil] Life insurance companies have been found to arbitrarily terminate one out of every 200 insurance claims.

On the 20th, the Financial Consumers Federation announced that, after investigating the number of quality guarantee cancellations and complaint cancellations following insurance claims in the first half of last year, as well as cancellations due to non-payment of insurance benefits, violations of disclosure obligations, and arbitrary cancellations by insurance companies, 2,427 cases (0.51%) out of 479,462 claims were forcibly terminated.

The insurance company with the highest cancellation rate relative to the number of claims was KDB Life, which canceled 48 out of 4,502 claims, reaching 1.07%, followed by AIA Life (0.77%) and Hanwha Life (0.76%).

The insurance company with the highest number of forced cancellations was LINA Life with 627 cases, followed by Samsung Life (560 cases) and Hanwha Life (372 cases).

The Financial Consumers Federation criticized, "Life insurers hastily process underwriting at the time of application to establish contracts and collect premiums for profit, but when insurance claims are made, they conduct strict reviews and refuse payment citing violations of disclosure obligations, forcibly terminating contracts?this is a bad practice."

The number of such forced cancellations is showing an increasing trend. In the second half of 2018, 2,323 cases (0.49%) out of 470,998 insurance claims were canceled.

Bae Hong, Director of the Insurance Department at the Financial Consumers Federation, said, "Forcibly terminating contracts when insurance claims are made after counting premiums as income without paying benefits is a bad practice that causes consumer complaints," adding, "It is an evil act by insurance companies that must be eliminated as soon as possible."