"If You File a Complaint About Dollar Insurance, You Will Receive a Full Refund"…Illegal Brokers Running Rampant (Comprehensive)

"100% Refund Guaranteed" "Get More Settlement Money"
Agents and Insurers Turned Agencies Rampant
Insider Information Revealed... Insurance Industry in Distress

[Image source=Yonhap News]

[Asia Economy Reporter Oh Hyung-gil] "I received a full refund for my dollar insurance. They said the refund amount was small, so I filed a complaint. Thanks to the well-prepared documents, I got it within a month."

As so-called ‘complaint brokers,’ specialized agencies handling insurance disputes, proliferate, insurance complaints are surging.

Previously, most cases involved securing higher settlements for traffic accidents, but recently, some have shamelessly promoted that consumers can receive full refunds upon canceling dollar insurance, citing consumer warnings issued by financial authorities. The consumer warnings are being exploited as a sales point by complaint agencies.

According to the insurance industry on the 14th, complaint agencies recruit insurance subscribers (complainants) by posting provocative phrases such as ‘100% insurance refund’ and ‘full refund’ on online blogs, cafes, and social networking services (SNS).

They approach subscribers who contact them after seeing promotional posts and provide complaint forms tailored to each case for consultation. Subscribers fill out these forms and submit them to the Financial Supervisory Service, which immediately notifies the relevant insurance company upon receipt.

The complaints mainly involve claims of mis-selling, such as ‘the agent’s explanation differed from the product details’ or ‘the subscription form signature was forged.’ Ultimately, the insurance company refunds the insurance money, the agency receives a consulting initiation fee, and if the complaint is accepted, they take a portion (10-15%) of the refund as a success fee, engaging in illegal business practices.

Independent loss adjusters specializing in automobile insurance claims are representative of those offering complaint agency services. They reportedly approach accident victims claiming they can secure higher settlements, often boasting backgrounds in major non-life insurance company claims departments.

Financial Complaint Status (Source: Financial Supervisory Service)

Despite Encouraging Complaint Agency Use... Insurers Say "We Can't Refuse"

Insurance companies lament that they have no practical way to distinguish whether complaints are legitimately filed by consumers or are demands for refunds through agencies, forcing them to resolve complaints reluctantly.

An official from a non-life insurer said, "Loss adjusters are effectively conducting sales activities by introducing tips consumers should know, like how to get higher traffic accident settlements," adding, "Most brokers are former agents or insurance company employees, so ordinary consumers trust them because they possess specialized insurance knowledge and insider information."

The proportion of financial complaints related to insurance, which generally accounts for the highest share of financial complaints, continues to rise. The insurance industry consensus is that the rate of complaint increase is accelerating as complaint agencies multiply. Recently, not only loss adjusters and complaint agencies but also some law firms have entered the complaint agency business.

Last year, financial complaints totaled 90,334, a 9.9% increase from 82,209 the previous year, with insurance complaints accounting for 53,294 cases, representing 59% of all financial complaints. This means 6 out of 10 financial complaints are insurance-related.

Life insurance complaints accounted for 23.4%, and non-life insurance complaints 35.6%, with a higher proportion in non-life insurance. Particularly, complaints related to incomplete sales such as insufficient product explanations for life insurers reached 9,663 cases, a 23.0% increase from the previous year.

An insurance industry official lamented, "The approach is to just file complaints first and see what happens," adding, "There are limits to response personnel, and the increase in complaints is causing delays in processing and unexpected damages."