[Asia Economy Reporter Ki Ha-young] Samsung Life Insurance has lost the lawsuit regarding unpaid immediate annuity payments.
According to the legal and insurance industries on the 21st, Samsung Life Insurance was defeated in the first trial of a class-action lawsuit filed by the Korea Financial Consumer Federation (hereinafter KFCF) in October 2018, which gathered cases of victims related to Samsung Life's immediate annuity. The amount of unpaid immediate annuity payments by Samsung Life Insurance is approximately 400 billion KRW.
An immediate annuity is a product where the subscriber deposits a lump sum and starts receiving monthly insurance payments in the form of an annuity from the following month. The plaintiffs are subscribers of the 'inheritance maturity type,' who receive annuity payments for a certain period and then receive a refund of the principal upon maturity.
Life insurance companies selling immediate annuities, including Samsung Life Insurance, calculate the monthly annuity amount by deducting a portion from the amount obtained by applying the announced interest rate to the net premium (the premium paid minus business expenses) to secure funds for maturity refunds for maturity-type subscribers.
Subscribers filed complaints with financial authorities in 2017, claiming that such deductions were not specified in the policy terms and that the insurance companies did not provide clear explanations, leading to disputes over unpaid immediate annuity payments.
KFCF stated, "The plaintiff's victory in the class-action lawsuit for the return of unpaid immediate annuity payments is a natural outcome," and added, "We expect plaintiff victories in other insurance companies' class-action lawsuits as well and hope for voluntary payments from life insurers."
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