Will the Increasing Consumer Insurance Disputes Lead to Easing of 'Duty of Disclosure'?

Duty to Inform Important Matters When Signing Insurance Contracts
Limits Difficult for Consumers to Judge
Assemblyman Jeong Uncheon Proposes Amendment to Commercial Act

Prime Minister Chung Sye-kyun attended the government questioning session on education, society, and culture held at the National Assembly on the 8th, responding to questions from Park Sung-joong, a member of the People Power Party. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Oh Hyung-gil] Measures are being promoted to reduce the burden on consumers regarding the duty of disclosure when purchasing insurance. It is expected that consumer disputes arising from insurance contracts being canceled or insurance payments being denied due to failure to fulfill the duty of disclosure will decrease.

According to the insurance industry on the 9th, Jeong Un-cheon, a member of the People Power Party (proportional representation), recently proposed a partial amendment to the Commercial Act that includes a plan requiring insurance companies to request disclosure from policyholders through written questions.

The current Commercial Act imposes an active duty of disclosure on the policyholder or insured (insurance consumer) regarding important matters at the time of the insurance contract, and stipulates that if this is violated, the insurer (insurance company) may cancel the insurance contract.

Cases of insurance companies refusing to pay insurance benefits due to violation of the duty of disclosure are frequent. According to the Financial Supervisory Service, the number of cases of non-payment of insurance benefits due to violation of the duty of disclosure increased by 52%, from 15,424 cases in 2016 to 23,450 cases in 2019. In the first half of last year alone, it reached 13,503 cases.

In particular, since it is difficult for insurance consumers to determine whether important matters may vary for each insurance product, there have been criticisms that the current law is unreasonable for consumers.

The amendment focuses on requiring disclosure through clear and accurate written questions regarding the insurance contract, and imposes responsibility on insurance companies to pay insurance benefits for matters that were not requested for disclosure. Representative Jeong also proposed an amendment to the Commercial Act during the 20th National Assembly to reduce the duty of disclosure for policyholders, but it was not processed within the term and was discarded.

The Ministry of Justice is also promoting an amendment to the Commercial Act to change the policyholder's "voluntary duty of disclosure" to a "responsive duty of disclosure." Last month, the Consumer Policy Committee (co-chaired by Prime Minister Jeong Seyeon and Professor Yeo Jeongseong of Seoul National University), a government body related to consumer policy, recommended amending the Commercial Act to ease the burden of the policyholder's duty of disclosure.

The committee stated, "Although insurance products are complex and diverse and insurance companies have high expertise related to insurance, it is unreasonable to impose the duty of disclosure unilaterally on consumers," and requested the Ministry of Justice to amend the law so that if all written questions from the insurance company are answered and disclosed, it will be regarded as faithfully fulfilling the duty of disclosure.

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