Insurance Companies to Block Lawsuits for Reimbursement Against Elementary School Students

Financial Authorities Strengthen Measures to Prevent Lawsuit Abuse by Insurance Companies

[Asia Economy Reporter Kim Hyo-jin] Insurance companies must undergo internal litigation management committee review before filing subrogation lawsuits against vulnerable groups such as minors.

This is intended to prevent cases like last March, when an insurance company filed a subrogation claim worth tens of millions of won against an elementary school student who had lost his father in a traffic accident and was effectively orphaned, causing controversy.

On the 8th, the Financial Services Commission and the Financial Supervisory Service announced plans to strengthen measures to prevent abuse of lawsuits by insurance companies against minors and economically vulnerable groups.

Insurance companies operate internal control mechanisms to prevent abuse of lawsuits against consumers, including prior review of whether to file a lawsuit. This is done through prior review by the litigation management committee, final approval by executives or higher, and oversight by compliance officers.

Additionally, the status of lawsuits by each company must be compared and disclosed on the Insurance Association’s website so that consumers can easily check. However, subrogation claims by insurance companies are excluded from such internal controls and disclosures, leaving no internal or external management mechanisms in place.

To improve this situation, financial authorities plan to expand the scope of litigation management committee reviews to include subrogation lawsuits against vulnerable groups such as minors and subrogation lawsuits on claims past the statute of limitations.

Furthermore, when making the final decision on whether to file a lawsuit after the litigation management committee review, approval by executives or higher and consultation with compliance officers will be required to ensure sufficient prior examination of the appropriateness of filing the lawsuit.

The scope of comparison and disclosure of insurance companies’ lawsuit status will also be expanded. Currently, the number of lawsuits filed related to insurance payments and the ratio of lawsuits filed compared to insurance claims are disclosed; going forward, the number of litigation management committee meetings, the number of cases reviewed, and the results of the reviews must also be disclosed.

Financial authorities also plan to share exemplary internal control cases for consumer protection such as debt reduction and litigation suspension for vulnerable groups by insurance companies, and to strengthen the insurance industry’s own efforts to protect vulnerable groups, including prohibiting lawsuits for debt reduction and statute extension, and debt forgiveness for claims with expired statutes of limitations.

To this end, financial authorities plan to reach agreement and promote revisions to individual insurance companies’ internal regulations related to expanding the scope of litigation management committee reviews and strengthening protection measures for vulnerable groups within this year.

Regarding the expansion of comparison and disclosure of lawsuit status, revisions to insurance business supervision regulations, enforcement rules, and association disclosure regulations are planned to be pursued in the first half of next year.

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