Multiple Life Insurance Companies Caught for 'Unfair Policy Transfers'... Fines Totaling Approximately 4.46 Billion Won

Life insurance companies were massively caught by financial authorities for so-called 'unfair replacement,' where consumers insured under existing policies are persuaded to switch to other similar insurance policies before the original policies mature.

The Financial Supervisory Service announced on the 2nd that on the 25th of last month, it imposed fines totaling approximately 4.46 billion KRW on nine life insurance companies, including Samsung Life Insurance, Mirae Asset Life Insurance, Hanwha Life Insurance, and Tongyang Life Insurance.

All these companies committed unfair replacement by improperly terminating customers' existing insurance contracts and having them apply for new insurance contracts. Unfair replacement occurs when agents, aiming to receive higher sales commissions, encourage consumers who are already insured to switch to similar other insurance policies under the pretexts of insurance remodeling or coverage enhancement.

Samsung Life Insurance was fined 2.021 billion KRW for unfairly terminating existing insurance contracts without properly informing customers of important comparisons between the contracts within six months before or after the application date, in 114 life insurance contracts recruited by agents and other sales organizations from March 2019 to March 2021.

Mirae Asset Life Insurance was fined 926 million KRW for unfairly terminating existing insurance contracts in 34 life insurance contracts recruited by agents and other sales organizations from 2019 to 2021. Hanwha Life Insurance and Tongyang Life Insurance were fined 766 million KRW and 366 million KRW respectively for unfair replacement in 98 and 87 cases.

In addition, Shinhan Life was fined 192 million KRW (58 cases), iM Life 112 million KRW (5 cases), Heungkuk Life 52 million KRW (9 cases), ABL Life 24 million KRW (3 cases), and Fubon Hyundai Life 11 million KRW (1 case).

Furthermore, Samsung Life Insurance received a supervisory warning for incomplete sales due to violation of explanation obligations caused by distortion and omission of important information when selling financial investment products, along with disciplinary actions including salary reductions, warnings, and reprimands for five executives and employees. From November 2017 to March 2020, Samsung Life sold 125 fund accounts worth 23 billion KRW to 122 general investors and was caught for distorting or omitting important information about financial investment products such as private funds or derivative-linked securities included in specific money trusts while recommending investments. A sales employee at a Samsung Life branch violated the suitability principle by obtaining a signed seal on a questionnaire for investor information from two investors in 2017, despite the investors not filling out the questionnaire, when selling financial investment products worth about 700 million KRW.

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