By Chung Ah-young
Nine life insurers, including Kyobo and Hanwha Life Insurance, have rejected the financial regulator's order to pay insurance money to beneficiaries of policyholders who committed suicide, sources said Wednesday.
Instead, they will likely bring the case to court to find out if they are obligated to pay the money.
The Financial Supervisory Service (FSS) sent an official notice last month to 12 life insurers to settle complaints filed by survivors of policyholders who killed themselves, demanding accidental death benefits, by Sept. 30. Their estimated payments amount to a combined 200 billion won.
Only two insurers ― Hyundai Life and Ace Life Insurance ― submitted a report to the FSS that they will pay the insurance money. Their payouts amount to a combined 170 million won, which is relatively low compared to the other insurers.
Samsung Life Insurance said that it will decide what it will do after the court hands down a ruling on the ongoing lawsuit filed by a customer in August.
Nine others ― Kyobo, Hanwha, ING, Tongyang, Dongbu, Allianz, Nonghyup, Met Life, Shinhan Life Insurance ― will bring the case to court to find out whether or not they are obliged to pay the insurance.
"We are considering a lawsuit against the customers who filed complaints demanding accidental death payouts to beneficiaries of policyholders who committed suicide. We need to see how the court will rule on the case as it is very sensitive," an official of a life insurer said.
He said that given the staggering amount of the payments, life insurers might suffer severe financial damage if they follow the FSS ruling.
The watchdog decided in August to sanction ING Life Insurance for failing to pay some 56 billion won in accidental death benefits for survivors of policyholders who killed themselves from 2003 to 2010.
Most life insurers paid general death benefits to the families of the suicide victims, as the amount for general deaths is half that for accidental deaths.
However, the contract's clause stipulates that insurers should pay accidental death benefits for suicides if more than two years have passed after the issuance of the policy.
The FSS received some 40 complaints asking for the insurance payments, citing the ING Life case. That clause was eliminated through a 2010 revision, but the regulator says that the insurers should take responsibility for policies issued before the revision.
The insurance companies argue that suicides are not accidental deaths and thus they have no obligation to pay insurance money for suicides because the accidental-death provision was "mistakenly stipulated."
The insurers claimed that if they pay more for suicides, it might encourage people to kill themselves as Korea has had the highest suicide rate among OECD member nations for years.
According to data submitted to Rep. Kim Gi-juhn, a lawmaker of the New Politics Alliance for Democracy (NPAD), ING Life Insurance holds the largest amount of unpaid insurance money with 65.3 billion won, followed by Samsung Life Insurance with 56 billion won, Kyobo Life Insurance with 22 billion won and Allianz Life Insurance with 15 billion won. Hanwha Life Insurance failed to pay 7.3 billion won.
The FSS is planning to expand its special inspection on other life insurers which used
the same clause.
The Supreme Court ruled that insurers should pay the insurance money in accordance with the contract terms even though the provision was wrongly stated in 2007.
Nine life insurers, including Kyobo and Hanwha Life Insurance, have rejected the financial regulator's order to pay insurance money to beneficiaries of policyholders who committed suicide, sources said Wednesday.
Instead, they will likely bring the case to court to find out if they are obligated to pay the money.
The Financial Supervisory Service (FSS) sent an official notice last month to 12 life insurers to settle complaints filed by survivors of policyholders who killed themselves, demanding accidental death benefits, by Sept. 30. Their estimated payments amount to a combined 200 billion won.
Only two insurers ― Hyundai Life and Ace Life Insurance ― submitted a report to the FSS that they will pay the insurance money. Their payouts amount to a combined 170 million won, which is relatively low compared to the other insurers.
Samsung Life Insurance said that it will decide what it will do after the court hands down a ruling on the ongoing lawsuit filed by a customer in August.
Nine others ― Kyobo, Hanwha, ING, Tongyang, Dongbu, Allianz, Nonghyup, Met Life, Shinhan Life Insurance ― will bring the case to court to find out whether or not they are obliged to pay the insurance.
"We are considering a lawsuit against the customers who filed complaints demanding accidental death payouts to beneficiaries of policyholders who committed suicide. We need to see how the court will rule on the case as it is very sensitive," an official of a life insurer said.
He said that given the staggering amount of the payments, life insurers might suffer severe financial damage if they follow the FSS ruling.
The watchdog decided in August to sanction ING Life Insurance for failing to pay some 56 billion won in accidental death benefits for survivors of policyholders who killed themselves from 2003 to 2010.
Most life insurers paid general death benefits to the families of the suicide victims, as the amount for general deaths is half that for accidental deaths.
However, the contract's clause stipulates that insurers should pay accidental death benefits for suicides if more than two years have passed after the issuance of the policy.
The FSS received some 40 complaints asking for the insurance payments, citing the ING Life case. That clause was eliminated through a 2010 revision, but the regulator says that the insurers should take responsibility for policies issued before the revision.
The insurance companies argue that suicides are not accidental deaths and thus they have no obligation to pay insurance money for suicides because the accidental-death provision was "mistakenly stipulated."
The insurers claimed that if they pay more for suicides, it might encourage people to kill themselves as Korea has had the highest suicide rate among OECD member nations for years.
According to data submitted to Rep. Kim Gi-juhn, a lawmaker of the New Politics Alliance for Democracy (NPAD), ING Life Insurance holds the largest amount of unpaid insurance money with 65.3 billion won, followed by Samsung Life Insurance with 56 billion won, Kyobo Life Insurance with 22 billion won and Allianz Life Insurance with 15 billion won. Hanwha Life Insurance failed to pay 7.3 billion won.
The FSS is planning to expand its special inspection on other life insurers which used
the same clause.
The Supreme Court ruled that insurers should pay the insurance money in accordance with the contract terms even though the provision was wrongly stated in 2007.
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