Did not provide a comparison of key points between the existing contract and the new contract
[Asia Economy Reporter Oh Hyung-gil] Rina Life and AIA Life, leading companies in insurance telemarketing (TM) sales, were found to have induced customers to cancel their existing insurance policies without comparing them to new contracts, then encouraged them to subscribe to similar products.
They received management caution measures and fines from financial authorities for such 'unfair replacement contracts.'
According to the insurance industry on the 25th, the Financial Supervisory Service notified Rina Life and AIA Life on the 23rd of fines of 34 million KRW and 43 million KRW respectively, along with requirements for voluntary corrective actions, for violating prohibitions related to the conclusion or solicitation of insurance contracts.
From January 2017 to March last year, Rina Life operated its IT system so that existing insurance contracts that were still valid and had similar coverage to new insurance contracts were excluded from comparison guidance at the time of subscribing to new contracts.
As a result, 202 TM insurance policyholders were not informed by comparing premiums, insured amounts, and major coverage between existing and new contracts, and were induced to apply for 209 new insurance contracts similar to the existing ones.
AIA Life also, from April 2018 to March last year, did not inform 365 insurance policyholders by comparing important details such as premiums, insured amounts, and major coverage between existing and new insurance contracts, and induced them to apply for 375 insurance contracts similar to the existing ones.
Additionally, from January 2017 to April last year, AIA Life operated its IT system so that major coverage details were not printed on the comparison confirmation document, and while soliciting 45 insurance contracts via TM, did not compare and inform important details between existing and new contracts.
According to Article 97 of the Insurance Business Act, a person engaged in concluding or soliciting insurance contracts must compare important details between the existing and new contracts to the policyholder or insured if the existing insurance contract is terminated within six months from the date of applying for the new insurance contract.
Furthermore, financial authorities imposed fines on AXA General Insurance, Heungkuk Fire & Marine Insurance, and MG Insurance for unfairly underpaying insurance claims for depreciation losses due to car accidents.
When the repair cost caused by an accident exceeds 20% of the car's value immediately before the accident for vehicles less than five years old after delivery, the insurance policy requires payment of depreciation loss insurance claims, but these companies unfairly reduced or did not pay such claims.
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