'Financial Safety Pin' Happy Call Recording and Handwritten Signature... Misused by Insurance Companies and Agents to Avoid Responsibility

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[Asia Economy Reporter Oh Hyung-gil] Jeong Mong-jin (68, pseudonym), who runs a small business, recently canceled his whole life insurance policy and raised an objection against Insurance Company A after the refund amount was less than expected. Three years ago, Jeong was introduced to a 'variable whole life insurance' policy by agent B, who claimed it was a better insurance plan. Jeong said, "I switched because B explained that if I paid premiums for at least three years, the surrender value would be no different from my existing insurance."

However, despite paying premiums for over three years, the amount refunded was only about one-third of the expected refund (88 million KRW), amounting to 22.5 million KRW. Insurance Company A refused to accept the objection, citing the happy call recording where Jeong acknowledged signing the contract with an expected refund amount and that he understood it was a whole life insurance policy, stating "there is no procedural problem."

Jeong expressed frustration, saying, "The company completely ignores the claim that the agent misrepresented the product during sales, relying solely on the happy call recording and handwritten signature," and added, "They are deceiving consumers after engaging in improper sales practices."

Although handwritten signatures and happy call recordings were mandated as 'safety measures' to ensure complete insurance sales, there are growing concerns that these are instead hindering consumers. Cases are increasing where agents' explanations differ from the actual insurance contract, yet the recordings and terms are exploited by insurers or agents as a means to evade responsibility.

According to financial authorities and the insurance industry on the 7th, among 9,346 complaints related to life insurance sales last year, 63.0% were related to incomplete sales of whole life and variable insurance (33.7% whole life, 29.3% variable). This means 6 out of 10 complaints were about whole life and variable insurance sales. Notably, while the total number of complaints decreased by 5.4% compared to the previous year, related complaints increased by 13.3% during the same period.

A significant portion of these complaints reportedly stem from issues related to happy call recordings and handwritten signatures. The happy call recording system was introduced in 2012 to prevent consumer damage caused by incomplete insurance sales.

It is a representative monitoring system that checks after the fact whether explanations were properly given during the sales process so that consumers can understand and purchase products. Insurance companies must call the policyholder during the withdrawal period to confirm important insurance details and record the call for storage.

Handwritten signatures are mandatory requirements during insurance contract formation and solicitation. The Financial Supervisory Service imposes sanctions if explanations of important contract details are omitted or if the policyholder's handwritten consent signature is not obtained. The Commercial Act also stipulates that "life insurance on the death of another person requires the written consent of that person at the time of contract formation."

However, consumers often regard happy call recordings and handwritten signatures as routine procedures and easily consent, leading to ongoing cases of harm.

The insurance industry consensus is that if the agent's explanation differs from the insurance contract details, it is practically difficult to prove unless the explanation is directly recorded or documented. This is because happy call recordings and handwritten signatures serve as evidence that sufficient explanation was provided at the contract stage.

In a recent case where a prosecutor decided not to indict an agent who enrolled a person with intellectual disabilities in 78 insurance policies over five years, happy call recordings and handwritten signatures were used as evidence that there was no procedural problem in the insurance subscription process.

The financial authorities also acknowledge that finding a clear solution is not easy. In 2018, they discussed mandating recordings of agent explanations with the insurance industry, but the plan was ultimately abandoned due to concerns that it would restrict agents' sales activities, cause customer resistance, conflict with contract and legal validity, and impose economic burdens related to managing recordings.

An insurance industry official advised, "Carefully verify whether the agent's explanation matches the insurance contract or terms, and if there is a discrepancy, confirm with the insurance company's call center or another agent," adding, "Keep records such as text messages or emails exchanged with the agent."

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