By Na Jeong-ju
The human rights watchdog has launched an investigation into claims that financial regulators have violated the privacy and rights of insurance policyholders, officials said Monday.
A civic group recently submitted a petition to the National Human Rights Commission (NHRC) to investigate the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS), alleging that the regulators infringed on the rights of policyholders by allowing insurers to accumulate a wide range of information about them and their health.
"We've accepted this petition," an NHRC spokesman said. "Our team is currently conducting an initial probe into the possible rights violation cases. The probe will continue for several weeks."
It's the first time that the rights agency has launched an inspection into the financial regulators.
Based on the results of the investigation, the commission will decide on whether to refer the case to law-enforcement authorities. It also can ask the regulators to revise related rules and practices, and punish concerned officials, although its recommendations are non-binding.
At the center of controversy is a collective search system for insurance claims, named KLICS, set up in 2007 by the Korea Life Insurance Association (KLIA), the lobby for life insurance companies here.
The main purpose of the system is to prevent insurance fraud, but critics say it is being abused by insurance firms.
Through the system, life insurers can share and accumulate detailed personal information of policyholders, including their height, weight and even their drinking and smoking habits. They also can access their insurance claims and treatment records.
According to the Korea Finance Consumer Federation, financial regulators are responsible for the privacy violations by insurance firms.
"In the early 2000s, the regulators allowed insurance firms to accumulate 25 types of information about policyholders, including their name, address and payment of insurance premiums," said Cho Yeon-haeng, head of the consumer group. "However, the firms misused the system to accumulate a lot more information than permitted, including their health and treatment records. These practices violate the privacy and rights of policyholders."
The FSS recently took disciplinary measures against six KLIA officials and banned it from collecting unpermitted information. The association was also ordered to scrap all unauthorized data it has accumulated.
Both the FSC and the FSS refused to comment on the rights agency's investigation.
The consumer group said it will file a class-action suit against insurance firms to demand compensation on behalf of individual victims.
"So far, about 200 insurance policyholders have showed willingness to participate in this legal battle against insurance firms," Cho said.
According to the FSS, insurance firms accessed unauthorized data more than 18.7 million times last year, compared to 1.21 million times in 2008 and 11.3 million times in 2010. The FSS said insurance firms should have sought prior permission from policyholders to access to the data, but they didn't do so.