As Insurance Dispute Mediation Surges... Authorities Propose Allowing 'Only Consumers to Appeal'

Financial Supervisory Service Considering Introduction of 'One-Sided Binding Effect'
Eun Seong-su: "Isn't This a Deprivation of the Right to a Trial?"
Rep. Lee Yong-woo Proposes Application to Disputes Under 20 Million Won

[Asia Economy Reporter Oh Hyung-gil] As the number of dispute mediation applications and lawsuits between consumers and insurance companies increases, there is speculation that the introduction of 'unilateral binding effect' prioritizing small claims may gain momentum. The unilateral binding effect is a system that allows only consumers to appeal against the decisions of the Financial Supervisory Service's Dispute Mediation Committee, and Financial Supervisory Service Governor Yoon Seok-heon is strongly pushing for its introduction.

However, following the opposition expressed by Financial Services Commission Chairman Eun Sung-soo, insurance companies also argue that the opportunity to receive legal interpretation may be reduced, and further discussion is needed.

According to the Life and Non-life Insurance Association on the 4th, the number of non-life insurance dispute mediation applications recorded 20,072 cases by the third quarter of this year, an increase of 10.4% compared to the same period last year. By insurance company, Samsung Fire & Marine Insurance had the highest number with 4,598 cases, followed by Hyundai Marine & Fire Insurance with 3,595 cases, DB Insurance with 2,678 cases, KB Insurance with 2,305 cases, and Meritz Fire & Marine Insurance with 1,885 cases. It was confirmed that large companies with many policyholders also ranked high in the number of applications.

The number of cases where lawsuits were filed along with dispute mediation also increased by 5 cases to 111 compared to last year.

On the other hand, the number of dispute mediation applications for life insurance significantly decreased from 7,806 cases in the third quarter of last year to 6,462 cases this year. However, the number of lawsuits filed increased from 21 to 24 cases.

Dispute mediation applications are procedures in which the Financial Supervisory Service induces an agreement between parties regarding disputes raised by consumers against financial companies. Typically, non-life insurance sees many dispute mediations because the policyholder and the person receiving the insurance money are different, such as in automobile insurance, and disputes arise over whether the insurance payout is appropriate based on the degree of fault.

In particular, with the popularization of black boxes, there is a growing trend of applying for dispute mediation to determine the degree of fault in traffic accidents.

Yoon Seok-heon, Governor of the Financial Supervisory Service, is attending the comprehensive audit of the Financial Services Commission and the Financial Supervisory Service at the Political Affairs Committee meeting held at the National Assembly on the 23rd, responding to questions from lawmakers. Photo by Yoon Dong-joo doso7@

The industry is closely monitoring the recent increase in dispute mediation applications. There is a view that the more the number of applications increases, the sooner the unilateral binding effect will be introduced.

The unilateral binding effect allows only consumers to file lawsuits against decisions, preventing financial institutions from disputing them.

The Financial Supervisory Service is considering introducing it for small claims as it can resolve disputes early, reducing the time, cost, and administrative burden for both consumers and insurance companies, but it is at a standstill due to opposition from financial companies and the Financial Services Commission.

Chairman Eun expressed a differing view from the Financial Supervisory Service at last month's National Assembly audit, saying, "While it is understandable from the perspective of consumer protection, I think it may deprive the constitutional right to a trial," regarding the unilateral binding effect.

In the National Assembly, Democratic Party lawmaker Lee Yong-woo is pushing for legislation on the unilateral binding effect amid conflicts between the Financial Supervisory Service and financial companies triggered by private equity fund incidents such as KIKO and Lime. In August, Lee proposed the 'Financial Consumer Protection Act Amendment' that applies the unilateral binding effect to small disputes under 20 million won.

The insurance industry is also cautious about the side effects that the introduction of the unilateral binding effect may bring. A non-life insurance company official said, "In the case of automobile insurance, even if it is a small claim lawsuit, once a conclusion is reached, it can affect all policyholders, so the impact is significant," adding, "Even for small claims, the right to file a lawsuit should be considered in the judgment."

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