By Kang Seung-woo
Staff reporter
Woori Aviva Life Insurance and LIG Insurance had an unusually high ratio of contracts nullified due to misleading or misinforming clients last year, the firms' public disclosure showed.
A comparison of local insurance firms' "misleading sales" between April 2009 and March 2010 also revealed that insurance products offered over the telephone, internet websites and TV shopping channels are often more deceptive than ones sold face-to-face by agents.
Misleading sales refer to contracts canceled by the clients' request on an insurer's failure to give enough information, or the absence of a written agreement or signature. Insurance firms have to report the ratio of their misleading sales against total sales in their annual report.
Woori Aviva had the highest rate by agent, logging 4.22 percent, which is three times higher than the average of the life insurance sector (1.31 percent). It was also the worst in telemarketing with a ratio of 16.85 percent, which is twice as high as the 8.08-percent average of the industry.
Woori Aviva is jointly owned by Woori Financial Group and AVIVA, a UK-based insurance company. It was previously LIG Life Insurance.
Although AVIVA is unheralded in Korea, the 300-year firm, whose total assets are valued at 700 trillion won ($600 billion) and totaling 50 million customers, is the No. 1 insurer in Britain and No. 5 in the world.
Heungkuk Life Insurance also showed poor records, with a ratio of 19.23 percent in the direct sales category, where the industry average was 5.43 percent. It also has the highest ratio of canceled contracts in the TV shopping category, at 9.53 percent.
In the fire and marine insurance market, LIG Insurance infamously stood out.
The firm posted 7.90 percent and 7.32 percent of misleading sales, in telemarketing and TV shopping categories, respectively. The industry averages were 3.70 percent and 4.02 percent.
Across the whole industry, face-to-face sales were proven to be a more honest way than indirect methods.
In the life insurance sector, the misleading sales ratio for phone, TV and internet sales marked 8.08 percent, 5.03 percent and 5.43 percent apiece, while only 1.31 percent of contracts sold directly by agents were ruled as misleading sales.
As for fire and marine insurance, the figures were 3.70 percent, 4.02 percent and 2.12 percent for phone, TV, and internet, respectively, and 0.31 percent for agents.