Parents who cut ties receiving insurance money?…Financial Services Commission mandates explanation of insurance beneficiaries

In 2019, a total of 40 improvement tasks were reviewed through the Ombudsman, with 18 improvement measures prepared

[Asia Economy Reporter Kangwook Cho] #. Mr. A purchased life insurance without designating a beneficiary because he did not receive a proper explanation about the insurance beneficiaries at the time of the contract. After Mr. A’s unexpected death, the insurance payout was made to Mr. A’s biological father, with whom he had cut ties for decades, rather than to his younger brother Mr. B, who lived with him, according to the inheritance order under civil law.

To prevent consumer damage caused by third-party insurance payouts, explanations about insurance beneficiaries will be mandatory at the time of insurance contracts. This improvement addresses the issue where insurance money is paid to unintended persons when the policyholder, like Mr. A, does not designate a beneficiary.

The Financial Services Commission announced on the 24th that through last year’s Ombudsman system, it reviewed a total of 40 improvement tasks, including making explanations about insurance beneficiaries mandatory, and derived 18 improvement measures.

Looking at the major tasks that have been promoted or completed, the obligation to explain will be further strengthened so that insurance policyholders can explicitly designate insurance beneficiaries when concluding contracts. This will be reflected in the revision of the Enforcement Decree of the Financial Consumer Protection Act, scheduled to take effect this month. Additionally, consumer protection measures for vulnerable groups, such as providing terms and conditions and explanatory documents with voice conversion for the visually impaired, will also be promoted.

Analog administrative regulations that have not reflected the changed financial environment, such as fintech, will also be rationally improved.

For example, the current recharge limit for prepaid electronic payment methods such as mobile gift certificates (2 million KRW, or 500,000 KRW for anonymous gift cards), coupons, and T-money transportation cards will be expanded, and related regulations will be improved to allow insurance contracts to be delivered via various electronic methods such as SMS and Kakao AlimTalk. The Financial Services Commission also explained that it is in consultation with the card industry to allow various authentication methods, including biometric information, when using simple payment apps of card companies. Currently, for card loan applications, authentication is limited to ID/PW and certified electronic signatures, except for payment services.

Institutional improvements to prevent duplicate subscriptions and claims for indemnity insurance are being promoted. Currently, private insurance companies check for duplicate indemnity insurance subscriptions through information sharing among companies, but some mutual aid associations (construction mutual aid, teachers’ mutual aid) do not share information, raising concerns about duplicate insurance payouts. Therefore, subscription and claim information for indemnity insurance will be expanded not only to insurance companies but also to mutual aid associations handling indemnity insurance.

Exceptions will be recognized for complaints arising from voice phishing prevention measures. Previously, complaints inevitably generated due to voice phishing prevention measures by financial companies were considered a demerit factor in financial consumer protection evaluations. For example, Mr. C, an employee of Bank B, was handling work according to supervisory authority guidelines to prevent voice phishing incidents when customer Mr. D complained about why his financial transaction purpose was being questioned. Mr. D later filed a complaint with the Financial Supervisory Service, and Bank B, which had many similar complaints, was criticized by the Financial Supervisory Service for having many customer complaints. However, going forward, the criteria will be improved to exclude such complaints from actual evaluations, and the industry will be informed accordingly.

For tasks requiring sufficient opinion gathering or legal amendments, the possibility of institutional improvements will be reviewed from a mid- to long-term perspective. The Financial Services Commission explained that although there was a proposal to establish standards for medical expenses and settlement amounts to prevent excessive insurance payouts for minor traffic accidents, considering the possibility of infringing on the medical rights of traffic accident victims, it will review institutional improvements after sufficient opinion gathering.

The Financial Services Commission stated, "As the term of the 2nd Ombudsman expires this month, the 3rd Ombudsman will be newly appointed to continue activities," and added, "In the future, the Ombudsman will faithfully perform its role as an advisory body for continuous inspection of financial regulations and institutional improvements for financial consumer protection."

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