[Reporter’s Notebook] Can We Trust Woori Financial Group with Our Life Insurance?

"Our executives and employees are cooperating well with the (investigation and inquiry), so it would be better to wait for the results before commenting." This was the statement delivered by Cho Byung-kyu, CEO of Woori Bank, to reporters immediately after a meeting with Lee Bok-hyun, Governor of the Financial Supervisory Service, on the 10th. Cho had not appeared at several official events prior to this. This statement did not advance at all from the apology made by former Woori Financial Group Chairman Lim Jong-ryong on the 28th of last month regarding the improper loan scandal involving former Woori Financial Group Chairman Sohn Tae-seung, where Lim said, "Once the investigation and inquiry results come out, appropriate measures will be taken."

Woori Financial Group, one of South Korea's four major financial groups, is currently pursuing entry into the life insurance business. Recently, it agreed to acquire shares of Dongyang and ABL Life Insurance for 1.5493 trillion KRW. While Woori Financial's participation is welcome amid the crisis in the life insurance industry caused by low birth rates and aging population, public perception is unfavorable. This is because out of approximately 60 billion KRW in loans extended by Woori Financial Group to corporations related to former Chairman Sohn Tae-seung's relatives using all its affiliates, 35 billion KRW was revealed to be improper loans. Chairman Lim and CEO Cho delayed reporting this to financial authorities despite being aware of it in advance. This act undermines the trustworthiness of the financial institution.

"One for all and all for one." German economist Alfred Manes defined life insurance, which is based on the spirit of mutual aid, in this way. Life insurance, which began in the 3rd century BC, is founded on 'trust' in humanity. The belief that losses to one's family caused by an unfortunate accident will be shared motivates one to willingly extend a helping hand to others' suffering. In the past, this trust was upheld by the authority of gods or leaders, but today, corporations bear this responsibility.

Given that Woori Financial Group focuses on 'covering for their own' despite the misconduct of the former CEO, there is doubt whether it can properly protect the customer trust embedded in the two life insurance companies with combined assets of 50 trillion KRW. A financial institution that practices mutual aid on the basis of 'one for acquaintances and acquaintances for one' might be better suited to managing neighborhood savings groups than the life insurance business. Since life insurance deals with risks related to human death and survival, it demands greater morality than banks, which evolved from moneylending businesses. Moreover, life insurance is expanding beyond simple whole life insurance to encompass comprehensive life care, including caregiving, nursing, and dementia care, in response to the ultra-aged society. No customer would entrust their life, aging, sickness, and death to a financial institution that has betrayed their trust.

In response to criticism from financial authorities and within and outside the industry, Woori Financial Group selected 100 key tasks last month to improve long-standing internal practices. While there was hope for a reflection on outdated organizational culture and a transformative solution, the first improvement measure recently announced by Woori Financial was merely the abolition of morning exercises. This raises questions about whether there is genuine will to improve the 'wrong organizational culture' that has recently caused problems.

The financial authorities plan to examine the Sohn Tae-seung scandal, Chairman Lim's delayed reporting, and capital adequacy related to the life insurance company acquisition during Woori Financial Group's regular inspection starting in October. It is hoped that the authorities will not make the mistake of placing excessive emphasis on financial figures provided by financial companies when evaluating their ratings. To prevent the trust in K-finance from being broken again, efforts must begin to remove the 'wrong organizational culture' hidden behind superficially good numbers.