DB Insurance Subsidiary Gave Positive Evaluations to Employees Who Paid Less Insurance Claims

Financial Supervisory Service Issues Institutional Warning to DB CSI Claims Adjustment

"Unreasonable Reflection of Consumer Rights Violation Factors in KPI"

[Asia Economy Reporter Oh Hyung-gil] It has been revealed that DB Insurance’s claims adjustment subsidiaries have been evaluating employees based on the number of cases in which insurance payouts to customers were reduced or not paid. Subsidiary employees, in order to receive favorable evaluations, have unreasonably calculated insurance payouts by broadly recognizing exemptions for the insurer over the customer.

According to financial authorities and the insurance industry on the 18th, the Financial Supervisory Service (FSS) issued a disciplinary action classified as an "institutional warning" to DB CSI Claims Adjustment, a subsidiary of DB Insurance, on the 14th. From August 2018 to June last year, DB CSI was found to have improperly underestimated the loss amount in 43 insurance claim cases and required or drafted settlement agreements as a condition for insurance payout.

Under the current Insurance Business Act, claims adjusters must not unjustly infringe upon the interests of policyholders or other stakeholders when performing claims adjustment duties. When an insured event such as a traffic accident occurs, claims adjusters investigate and analyze the event to determine the scope of compensation and estimate the loss amount, and must perform their duties objectively and fairly.

However, the FSS investigation revealed that DB CSI operated a performance evaluation indicator (KPI) system for employees using metrics such as the amount of insurance payout reductions and the number of reduced payout cases to calculate performance. Scores were assigned based on the achievement rate against targets. These KPI results were reflected in employee rewards and salaries.

The company explained, "To prevent excessive insurance claims from being paid due to errors by practitioners beyond the insurance payout required by the policy terms, we have reflected the reduced amount from the claimed insurance amount calculated according to DB Insurance’s unfair claim prevention management standards."

The financial authorities’ judgment differed. The FSS viewed that encouraging practitioners to focus on reducing insurance payouts or exemptions in claims adjustment and payout review undermines fair claims adjustment and insurance payout review duties. They concluded that including elements that could infringe on consumer rights in KPIs is unreasonable and recommended improving the KPI system.

It was also confirmed that from January 2016 to August last year, DB CSI violated business standards by conducting approximately 60,000 claims adjustment cases worth 20 billion KRW nationwide at 17 offices without full-time claims adjusters.

Last month, two other claims adjustment subsidiaries of DB Insurance, 'DB CAS Claims Adjustment' and 'DB Automobile Insurance Claims Adjustment,' also agreed to receive corrective measures from financial authorities for applying insurance payout reduction amounts as KPI items.

DB CAS, like DB CSI, calculated performance by summing insurance payout reductions in KPI items such as insurance payout review thoroughness and actual medical expense review thoroughness, and reflected these in scores. DB Automobile Insurance also operated average insurance payout and loss management as KPI items for departments, centers, and practitioners. The authorities judged that this induced claims adjustment aimed at reducing insurance payouts or exemptions.

This content was produced with the assistance of AI translation services.