Financial Services Commission Disciplinary Action Regarding Samsung Life Insurance's Non-Payment of Cancer Hospitalization Benefits
[Asia Economy Reporter Changhwan Lee] As the financial authorities imposed severe sanctions regarding Samsung Life Insurance's refusal to pay cancer hospitalization insurance benefits, which has been ongoing for over a year, Samsung Life Insurance is contemplating its response strategy.
It is reported that Samsung Life is even considering administrative litigation to contest the authorities' decision. However, there are also forecasts that the decision will not be made easily as new business ventures such as MyData could be delayed.
According to the insurance industry on the 27th, the Financial Supervisory Service (FSS) is expected to notify Samsung Life of the comprehensive inspection report early next month after receiving the resolution from the Financial Services Commission (FSC).
At the 2nd regular meeting held the previous day, the FSC judged that Samsung Life violated the Insurance Business Act by not paying cancer hospitalization insurance benefits to some patients in convalescent hospitals and decided to impose a fine of 155 million KRW.
Regarding Samsung Life not claiming compensation for delayed contract performance from its affiliate Samsung SDS, the FSC determined that it did not constitute a violation of the Insurance Business Act, contrary to the FSS's findings, and imposed a 'corrective order.' The previously decided 'institutional warning' severe sanction by the FSS was also confirmed.
Samsung Life plans to decide on its response direction after reviewing the comprehensive inspection report. A Samsung Life representative explained, "Since we have not yet received specific details regarding the FSC's resolution, we need to see the report to determine our future stance."
If Samsung Life does not accept the financial authorities' sanctions, it can proceed with filing objections or administrative litigation. Appeals must be filed within 90 days from the date of sanction notification.
However, if Samsung Life contests the sanctions, internal deliberations are expected to deepen as new business ventures could be indefinitely delayed. Even if Samsung Life accepts the sanctions after the comprehensive inspection, it cannot enter new businesses requiring financial authorities' approval for one year from the sanction notification date. If it contests, new business entry could be blocked for several years.
Samsung Life and its subsidiary Samsung Card have been blocked from entering new businesses since 2020, citing that sanctions have not been finalized. This is why Samsung Card is the only card company that has not launched a MyData (Personal Credit Information Management Service) business.
MyData is a service that collects customers' personal credit information scattered across banks, card companies, insurance companies, and securities firms, allowing financial assets to be managed in a single app. As a result, Samsung Life and its subsidiaries have fallen behind competitors in entering the latest financial services.
There are also criticisms that the delay in the financial authorities' sanction resolution caused greater damage to the company. It took more than 13 months from the FSS sanction deliberation in early December 2020 until the FSC finalized the severe sanctions against Samsung Life. If the sanction resolution had not taken so long, restrictions on Samsung Life's new business ventures might have already been lifted.
An insurance industry official said, "With the revival of the dusting-off style comprehensive inspection, sanction decisions have become too prolonged, resulting in companies' new business entries being further delayed," and added, "There is a need to change the inspection method."
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