Lina fined for tardy insurance payment

By Kim Bo-eun

Lina Korea CEO Benjamin Hong.

The country's top financial regulator has fined U.S. insurer Cigna's Korean subsidiary, Lina Korea, for being late in its insurance claims payouts.

The Financial Supervisory Service (FSS) notified Lina Korea, July 8, of the 12 million won fine imposed for making payments on two insurance claims 17 and 28 business days, respectively, after the final dates the payments were due in 2018.

The policy terms stated that Lina had been required to make the payment within 30 business days of the claim being filed. The FSS imposed the fine because Lina failed to make the payments within the specified time.

A Lina Korea official said, “Out of 250,000 late payments that were made collectively by insurers, we only account for two.” He did not specify why the payments were delayed, and said Lina would pay the fine.

Payment delays generally occur when claims are suspected to be fraudulent, or when it takes time to determine whether or not the policyholder should receive the payment based on their medical history, or when there is a problem with documents.

Meanwhile, Lina has maintained the lowest level of complaints over insurance policies among insurers here for three consecutive years.

According to the FSS, Lina had the lowest number of complaints filed per 100,000 insurance contracts. The figure for 2019 stood at 11.3, which is similar to the 10.8 of 2018 and 10.52 of 2017.

Figures show the level of complaints over insurance contracts has been low despite Lina not having a person-to-person channel. The insurer only operates through telemarketing.

Lina Korea CEO Benjamin Hong, who has served a 10-year term, will step down in December. Cigna appointed Eric Ng, a former senior director of financial analysis at Cigna, as CFO of Lina earlier this month.

This is the first time in 10 years Cigna has appointed a figure from its headquarters to a position at Lina Korea. The CFO is expected to look into Lina's management as well as the business environment for insurers here, because they face increasingly tough circumstances due to the COVID-19 pandemic and other factors.

Lina's return on assets and return on equity ranks No. 1 among life insurers at 7.61 percent and 22.63 percent, respectively. Its net profit, which stood at 97 billion won in 2010, surged to 350 billion won last year.