[Becoming an Insurance Insider] Controversy Over Illegality of Insurance Complaint Agencies Claiming to Protect Consumers

Insurance Complaint Agency Involved in Illegal Controversy

[Editor's Note] Difficult insurance, a clear explanation of insurance that remains confusing even after listening to explanations. There is no bad insurance in the world, only insurance that does not fit me. If you follow easy-to-understand insurance explanations, the path to becoming an 'insurance insider' is not far away.

(pixabay)

[Asia Economy Reporter Oh Hyung-gil] Companies that handle insurance complaints for consumers are increasing, claiming that they can refund the full surrender value of insurance policies or recover financial losses even for policies surrendered decades ago.

These companies promote themselves as rescuing victims of incomplete sales that deceive consumers, but concerns have been raised about illegal activities in the process of excessive complaint filings and charging fees, so caution is advised.

According to the insurance industry on the 25th, the Korean Bar Association and the Insurance Association recently filed criminal charges against some insurance complaint agencies for illegally operating by collecting upfront fees (contract fees) and success fees while promising to obtain additional surrender refunds for insurance consumers.

The court, through summary indictment, sentenced the company to a fine for illegal business practices violating the Attorney-at-Law Act. The company has filed a formal trial petition against the fine for violating the Attorney-at-Law Act, so the legality of the insurance complaint agency service is expected to be decided in a formal trial.

Complaint agencies are targeting the characteristic of insurance products where the surrender value is less than the premiums paid amid increasing mid-term cancellations due to household financial difficulties, promoting that they help consumers recover the full amount of premiums paid.

For example, they pressure insurance companies by claiming incomplete sales, saying they joined whole life insurance policies thinking they were pension or savings products without sufficient explanation, and threaten to file complaints with financial authorities.

Consumers Seeking Resolution of Insurance Disputes Must Follow Proper Procedures When Filing Complaints

The problem is that these agencies file complaints on behalf of subscribers or provide pre-prepared complaint forms and advice.

In particular, it is known that they charge an upfront fee of about 50,000 to 100,000 KRW before giving advice, and if the insurance premium is refunded, they receive about 10% of the premium as a success fee.

This constitutes a violation of the current Attorney-at-Law Act.

Article 109 of the Attorney-at-Law Act stipulates that anyone who is not a lawyer but promises to receive money or other benefits and handles legal affairs such as appraisal, representation, mediation, reconciliation, solicitation, legal consultation, or preparation of legal documents, or mediates such acts, shall be punished by imprisonment for up to seven years or a fine of up to 50 million KRW.

Accordingly, the Life Insurance Association and the General Insurance Association plan to continuously monitor illegal complaint agencies and take active measures such as additional criminal charges and operating a reporting center until illegal operations are eradicated.

An insurance industry official said, "It is desirable for consumers to file complaints following proper procedures to resolve dissatisfaction and disputes related to insurance," adding, "Insurance consultations are also available at the life and general insurance association counseling centers."

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