'Samsung Life Insurance Wins Second Trial in Immediate Annuity Case... Overturns First Trial Loss'

August 17, 2021, Samsung Life Insurance Building, Seocho-gu, Seoul / Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Kim Daehyun] Samsung Life Insurance, which lost the first trial in the 400 billion KRW immediate annuity lawsuit, won the appeal trial.

On the 23rd, the 12-2 Civil Division of the Seoul High Court (Presiding Judges Kwon Sunhyung, Park Hyeongjun, Yoon Jonggu) overturned the first trial ruling and ruled in favor of Samsung Life Insurance, stating "All claims of the plaintiffs are dismissed" in the insurance claim lawsuit filed by 57 immediate annuity subscribers including Mr. A against Samsung Life Insurance.

The court stated, "The defendant provided sufficiently detailed explanations regarding the pension amount calculation for the plaintiffs to decide whether to enter into the insurance contract in question," rejecting Mr. A's claim of 'breach of duty to explain.'

Immediate annuity is a product where subscribers deposit a lump sum and receive monthly insurance payments in the form of an annuity starting one month later. Mr. A and others are 'inheritance maturity type' subscribers who receive annuities for a certain period and then receive the principal refund upon maturity.

Previously, life insurance companies selling immediate annuities, including Samsung Life Insurance, did not pay the entire amount calculated by applying the announced interest rate to the net premium (premium paid minus business expenses) as the monthly annuity amount, but deducted a certain amount to prepare funds for maturity refunds.

Mr. A and others filed complaints with financial authorities in 2017, claiming that such deductions were not specified in the terms and conditions and that there was no clear explanation from the insurer, leading to disputes over unpaid immediate annuity payments.

The Financial Supervisory Service's Dispute Mediation Committee decided that insurers should pay the underpaid insurance money, and the FSS recommended that insurers pay the remaining subscribers as well. However, Samsung Life Insurance, Hanwha Life Insurance, Kyobo Life Insurance, Tongyang Life Insurance, Mirae Asset Life Insurance, KB Life Insurance, and others refused, leading to litigation. Among them, Samsung Life Insurance had the largest amount with 50,000 people and 400 billion KRW.

The first trial ordered Samsung Life Insurance to "pay the plaintiffs 598 million KRW in unpaid amounts." It also stated, "To fulfill the duty to explain and specify, it is necessary to specifically explain and indicate that a portion of the amount will be withheld from the plaintiffs, but such content is neither in the terms and conditions nor was it likely explained during the product sales process."

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