"Excusing Non-Disclosure Obligations"
7 Life Insurers, 4 Non-Life Insurers Caught
FSS Imposes Fines and Other Sanctions
[Asia Economy Reporter Oh Hyung-gil] A large number of insurance companies have been caught for refusing to pay insurance claims or arbitrarily reducing payments, claiming that policyholders failed to notify unrelated matters in advance.
Some non-life insurance companies deliberately underpaid automobile insurance claims, while life insurance companies were found to have omitted explanations of important matters during contract signing. Some argue that penalties are too weak, allowing repeated behavior of unjustly withholding or reducing insurance payments, and call for strict measures.
According to the insurance industry on the 30th, the Financial Supervisory Service recently notified disciplinary actions against seven life insurers and four non-life insurers.
Lotte Non-Life Insurance unjustly reduced KRW 127 million out of KRW 388 million in insurance claims for four contracts from 2015 to 2018, despite no grounds for reduction under the terms, citing breach of duty to notify unrelated matters after the contract. During the same period, for 22 automobile insurance cases involving vehicles less than two years old, repair costs exceeded 20% of the vehicle’s value before the accident, qualifying for compensation for diminished car value under the terms, but KRW 151 million was unjustly unpaid. The company was fined KRW 3 million.
During the same period, Hyundai Marine & Fire Insurance reduced KRW 197 million in insurance claims due to breach of duty to notify unrelated matters, and failed to pay KRW 86 million for hospitalization and KRW 40 million for car repairs, resulting in a fine of KRW 266 million.
Samsung Fire & Marine Insurance reduced KRW 82 million in insurance claims for 16 contracts due to breach of duty to notify, and underpaid KRW 203 million for 90 automobile insurance cases. A fine of KRW 17 million was imposed.
Hanwha General Insurance unjustly reduced KRW 130 million in insurance claims and failed to pay KRW 178 million in automobile insurance claims, receiving a fine of KRW 25 million. Additionally, it improperly collected KRW 73 million in premiums by not applying premium exemption where applicable under the terms.
Shinhan Life Insurance was fined KRW 266 million and received a corporate warning for failing to explain important details about business expenses deducted from premiums during telephonic sales of savings insurance from 2016 to 2018. Three employees were given warnings.
Mirae Asset Life Insurance was fined KRW 63 million for failing to explain important matters in 51 savings insurance cases. Heungkuk Life Insurance was also fined KRW 165 million for the same reason and was fined KRW 1 million for arbitrarily reducing insurance claims by KRW 249 million in 10 contracts from 2015 to 2018.
Some insurers were penalized for underpaying insurance claims. MetLife Life Insurance underpaid KRW 242 million for 15 contracts from 2016 to 2018 and was fined KRW 13 million. KDB Life Insurance arbitrarily reduced insurance claims and was fined KRW 4 million with a warning issued to one executive. DGB Life and Orange Life were also fined KRW 6 million and KRW 7 million respectively for arbitrary underpayment.
There are calls to strengthen sanctions and improve systems to prevent recurrence of unfair and underpayment practices by insurance companies.
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