Kyobo Life Insurance Loses Immediate Annuity Lawsuit... "First Among the Top 3 Life Insurers"

[Asia Economy Reporter Kim Daehyun] Immediate annuity subscribers won a lawsuit against Kyobo Life Insurance demanding "the underpaid insurance money." Previously, Mirae Asset Life Insurance and Tongyang Life Insurance also lost as defendants in a joint lawsuit over immediate annuities, but this is the first time that three major life insurance companies have lost.

According to the law firm Jeongse, on the 3rd, the Seoul Central District Court ruled in favor of the plaintiffs in a lawsuit filed by four immediate annuity subscribers against Kyobo Life Insurance, claiming unpaid amounts. The court stated that since the policy does not specify that 'a portion of the monthly pension is deducted for the maturity refund,' it is appropriate for the insurer to pay the total underpaid pension amounting to 70 billion KRW to the subscribers.

Earlier, maturity-type immediate annuity subscribers raised the issue in 2017 by demanding insurance companies to pay the underpaid pension amounts, bringing the immediate annuity dispute to the surface.

An immediate annuity is a product where the subscriber deposits a lump sum and receives monthly insurance payments in the form of a pension immediately. The insurer deducted a portion of the monthly pension to prepare for the maturity refund for maturity-type subscribers, but the subscribers filed complaints with authorities, claiming that this was not specified in the policy and was not explained.

In response, the Financial Supervisory Service's Dispute Mediation Committee recommended life insurers to pay more insurance money, but Samsung Life, Hanwha Life, Kyobo Life, Tongyang Life, Mirae Asset Life, KB Life, and others refused, leading to litigation. Among them, Shinhan Life and AIA Life accepted the committee's mediation or dropped the lawsuit midway and decided to pay the unpaid pension amounts.

Attorney Kim Hyeongju, representing consumer groups, evaluated, "This increases the likelihood of subscribers winning in the more than 10 ongoing lawsuits against the remaining three companies, Samsung Life, Hanwha Life, and KB Life."

According to the Financial Supervisory Service's 2018 data, the scale of the immediate annuity unpaid dispute involved a total of 160,000 people and 800 billion to 1 trillion KRW. Samsung Life had the largest share with 55,000 people and 430 billion KRW, followed by Hanwha Life (85 billion KRW) and Kyobo Life. The first trial ruling on Samsung Life, which has the largest unpaid amount, is expected as early as August.

Kyobo Life stated that it will thoroughly review the judgment and decide on future response directions. However, since Mirae Asset Life and Tongyang Life, which previously lost, have all appealed, Kyobo Life is also expected to file an appeal.