'Quick to Sue' Insurers Changed...? Insurance Claim Lawsuits Decrease for 2nd Year in a Row

[Asia Economy Reporter Oh Hyung-gil] Recently, a lawyer's YouTube video sharing the story of an elementary school student sued by Insurance Company A went viral. The story of Company A filing a subrogation lawsuit worth tens of millions of won against an elementary school student who lost his father in a traffic accident and was effectively orphaned sparked public outrage, leading the insurance company to withdraw the lawsuit and issue an apology.

As criticism arose that insurance companies were indiscriminately filing lawsuits, voices of regret also emerged within the industry. A representative from Insurance Company B lamented, "Unlike before, the internal procedures for filing lawsuits have been strengthened and become very stringent, and with a focus on consumer protection, the number of insurance claim lawsuits has been decreasing."

The number of lawsuits filed by insurance companies against consumers has significantly decreased. This is attributed to financial authorities curbing unfair lawsuits by insurers and insurers themselves refraining from lawsuits in line with consumer protection policies.

According to the lawsuit status related to insurance claim payments disclosed by the Life and Non-life Insurance Association on the 14th, lawsuits between insurance companies and consumers totaled 6,343 cases last year, slightly down from 6,493 cases in the same period the previous year. Although the number of lawsuits surged from 7,831 cases in 2016 to 8,034 cases in 2017, it has shown a decline for two consecutive years.

The number of civil mediation applications has also been decreasing annually. It dropped from 972 cases in 2016 to 773 cases in 2017, and further to 285 cases in 2018 and 321 cases in 2019. This indicates that legal disputes between insurance companies and consumers have decreased compared to the past.

An industry insider said, "Criticism that insurance companies were indiscriminately filing lawsuits against consumers has been raised for the past 4 to 5 years, prompting financial authorities to strengthen management of insurance claim lawsuits," adding, "Being aware of criticism that lawsuits are filed at the drop of a hat, insurers have become more reluctant to file lawsuits."

The Financial Supervisory Service took measures in 2015 to reduce lawsuits by insurance companies by requiring the establishment of internal lawsuit management committees within insurers. It also inspected the lawsuit filing status of financial companies with a high number of lawsuits. The Insurance Business Act was amended to impose fines if insurers engage in unfair practices related to insurance claim payments.

On the other hand, legal disputes related to insurance claims, such as those involving actual medical expense insurance or automobile insurance, have not significantly decreased. Last year, there were 5,356 insurance claim lawsuits related to non-life insurance. During the same period, lawsuits related to life insurance were only 987 cases.

Among non-life insurers, Hyundai Marine & Fire Insurance recorded 1,206 lawsuits related to insurance claims. This was followed by DB Insurance with 994 cases, Samsung Fire & Marine Insurance with 865 cases, and KB Insurance with 478 cases. Among life insurers, Samsung Life Insurance had 235 cases, Hanwha Life Insurance 175 cases, and Kyobo Life Insurance 136 cases. Since these are all major companies with a large number of insurance claims, it is interpreted that many cases lead to lawsuits.

Looking at the lawsuit ratio per 10,000 insurance claims, Paribas Cardif Non-life Insurance had the highest rates last year with 58.48% in the first half and 41.49% in the second half, although the number of claims was only 171 and 241 cases respectively. Following were AXA Non-life Insurance (7.19% in the second half), The-K Non-life Insurance (2.09%), and Hyundai Marine & Fire Insurance (1.12%) with high lawsuit ratios. Among life insurers, Hana Life Insurance (0.11%) and KB Life Insurance (0.06%) were recorded as having relatively high ratios.

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