FSS to Take Follow-up Measures over Insufficient Explanation to Immediate Annuity Policyholders

The Financial Supervisory Service will take follow-up actions, including inspections, in response to the Supreme Court's decision that life insurance companies such as Samsung Life Insurance did not sufficiently fulfill their duty to explain insurance premium deductions to immediate annuity policyholders.

On the 19th, the Financial Supervisory Service announced through a press release, "We will begin follow-up measures, including inspections, from the perspective of consumer protection."

Previously, on the 16th, the Supreme Court upheld the lower court's ruling against the plaintiffs in a lawsuit filed by Samsung Life Insurance immediate annuity policyholders seeking unpaid insurance benefits from Samsung Life Insurance.

An immediate annuity is an insurance product that allows policyholders to pay the entire premium in a lump sum and then receive monthly annuity payments starting the following month. Samsung Life Insurance has been deducting a portion from the amount calculated by applying the declared interest rate to the net premium paid by policyholders of the inheritance-maturity type immediate annuity before paying out the annuity. In 2017, policyholders filed complaints with financial authorities, claiming they had not received sufficient explanations regarding these deductions. In 2018, the Dispute Mediation Committee of the Financial Supervisory Service recommended that life insurance companies pay additional insurance benefits, but Samsung Life Insurance refused, leading to a legal battle.

The Supreme Court acknowledged that Samsung Life Insurance failed to properly fulfill its duty to explain to policyholders. However, the court decided that invalidating all insurance contracts would be disadvantageous to the policyholders themselves, and thus rendered its decision accordingly.

Financial Supervisory Service Headquarters.