Loss Compensation Agreements Are Illegal... Financial Supervisory Service Discloses Dispute Cases

Even Eye Injection Procedures Are Hard to Recognize as Surgery

The Financial Supervisory Service (FSS) introduced major complaints and dispute cases that occurred in the third quarter of this year and disclosed the resolution standards. It emphasized that when purchasing insurance, one must disclose if they have been prescribed medication, even if they have not taken or purchased it, and warned that surrendering a savings-type insurance policy early may result in a principal loss. Additionally, it stressed that loss compensation agreements in investment product transactions are illegal from the outset.

The FSS announced the "2023 Third Quarter Major Complaints and Dispute Cases and Dispute Resolution Standards Disclosure" containing these details.

Regarding complaints and dispute cases, it first emphasized the obligation to notify the insurer of prescribed medications when applying for insurance, even if the medication was not purchased or taken. It explained that if the insured fails to disclose the prescription and the insurer cancels the insurance contract, it is not problematic.

Caution is also necessary when subscribing to savings-type insurance. Since the product description states that the surrender refund amount may be less than or even zero compared to the premiums paid due to deductions such as fees, it urged attention to the possibility of principal loss upon early termination.

It explained that when a car accident occurs, whether nursing care expenses are paid depends on the degree of injury. Even if nursing care expenses arise, they can only be received from the insurer if the injury corresponds to injury grades 1 to 5 under the compulsory insurance injury classification.

Surgery involving drug injection into the eye may also not be covered by insurance benefits. If the insurance policy does not explicitly cover ocular injections such as Avastin separately, injection therapies may be difficult to recognize as surgery.

Attention is also required for the automobile insurance 'Own Vehicle Damage Clause.' This clause defines compensable accidents as those caused by collision or contact with another vehicle, so collisions with objects other than vehicles are not covered. To receive compensation in such accidents, one must subscribe to special clauses such as the 'Single Vehicle Accident Coverage Endorsement.'

Loss compensation agreements are also illegal. The Capital Markets Act prohibits employees or others from promising loss compensation in advance during investment product transactions. An FSS official explained, "Loss compensation cannot be demanded based on agreements that are fundamentally invalid," adding, "Whether liability for damages exists is determined comprehensively by considering the transaction circumstances and methods, the customer's investment situation, the risk level of the transaction, and the extent of explanations provided."

Financial Supervisory Service, Yeouido, Seoul. Photo by Jinhyung Kang aymsdream@

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