Review of 'Samsung Life Heavy Disciplinary Action'... Likely to Be Postponed to Second Half of the Year

Ahead of the Final Financial Services Commission Regular Meeting of the First Half
High Possibility of Not Submitting Severe Disciplinary Proposals
Conflict Resolution with Cancer Patients Also Facing Difficulties

[Asia Economy Reporter Oh Hyung-gil] It appears that the financial authorities' decision on Samsung Life Insurance's 'severe disciplinary action' is ultimately being postponed to the second half of the year.

Samsung Life Insurance received an institutional warning last December due to non-payment of cancer insurance hospitalization fees for long-term care hospitals. As the final decision has been repeatedly delayed over six months, concerns are growing over increasing management uncertainty.

According to financial authorities and the insurance industry on the 16th, the proposal for severe disciplinary action against Samsung Life Insurance is unlikely to be submitted at the last Financial Services Commission regular meeting of the first half, scheduled for the 23rd. A Financial Services Commission official said, "As far as I know, it is still under discussion in the agenda review subcommittee," adding, "Although it is delayed, please understand it as meaning that it is being reviewed with caution."

The Financial Supervisory Service conducted a comprehensive inspection of Samsung Life Insurance in 2019. It uncovered violations including non-payment of cancer insurance hospitalization fees for long-term care hospitals and breaches of major shareholder transaction restrictions. Last December, the Disciplinary Review Committee decided on an institutional warning, which is a severe disciplinary action. It immediately recommended imposing fines and penalties to the Financial Services Commission.

Additionally, in March, the Financial Supervisory Service notified Samsung Life Insurance of management caution, stating that Samsung Life Service Loss Adjustment, a claims adjustment subsidiary of Samsung Life Insurance, used guidelines that assumed non-payment of insurance claims when reviewing cancer insurance hospitalization claims for long-term care hospitals.

The atmosphere, which had been progressing smoothly, was halted this year. The unusually prolonged discussion in the agenda subcommittee has led to talks about reconsidering the severe disciplinary action against Samsung Life Insurance from scratch. A variable also emerged when the Supreme Court ruled in favor of Samsung Life Insurance in a lawsuit filed by the head of a cancer patient group last October, demanding payment of hospitalization fees for long-term care hospitals.

There is a high possibility that the conclusion will be delayed into the second half of the year as well. The agenda subcommittee is currently burdened with major pending issues. Discussions are ongoing regarding the disciplinary review of Lime Fund sales sanctions against Shinhan Financial Investment, KB Securities, and Daishin Securities.

The agenda subcommittee's standing members are also not accelerating discussions due to recent personnel changes. Standing member Choi Hoon was appointed ambassador to Singapore on the 28th of last month, and non-standing member Shim Young's term expires on the 25th.

Meanwhile, conflicts with cancer patients continue regarding the non-payment of cancer insurance hospitalization fees for long-term care hospitals. The cancer patient support group responding to insurance companies (Boammo) has been occupying Samsung Life Insurance's customer plaza for over 500 days since January last year. Despite the court issuing a ban on gatherings, they have not withdrawn and are demanding that the Financial Services Commission finalize the severe disciplinary action against Samsung Life Insurance and exercise its authority to order payment of the unpaid cancer hospitalization insurance benefits to date.

As the disciplinary confirmation for Samsung Life Insurance and its financial affiliates is delayed, uncertain management variables are increasing. If the institutional warning is finalized, Samsung Life Insurance and its subsidiaries will be unable to enter new business areas requiring financial authorities' approval for one year.

Following the suspension of the MyData business license review applied for by Samsung Card last year, Samsung Life Insurance's acquisition of a 25% stake in the UK real estate management company Savills IM last month also requires approval from the financial authorities.