Samsung, Hanwha, Kyobo punished over unpaid suicide claims
The Financial Supervisory Service (FSS) has decided to impose a penalty on three life insurance giants for failing to comply with the regulator’s order to pay their policyholders’ suicide claims.
Life insurance units of Samsung, Hanwha and Kyobo are expected to face partial business suspensions for a certain period ranging from one month to three months.
Their chief executives will be held accountable for neglecting their regulatory obligations to pay out full benefits on overdue claims.
The FSS said it will hold meetings with the FSC to “finalize the level of their business suspension.”
Samsung Life Insurance CEO Kim Chang-soo and Hanwha Life Insurance CEO Cha Nam-gyu will have to step down and leave the industry for at least three years after the FSS finalizes its disciplinary measures with the Financial Services Commission (FSC).
Regulations forbid executives to be hired in the industry for three years after being hit with a penalty. Kim was about to be reappointed as Samsung Life’s CEO, while Cha’s CEO term ends in March next year.
Kyobo Life Insurance CEO Shin Chang-jae only received a warning from the regulator as Kyobo notified the regulator it would pay all the suicide claims just hours before the FSS held an internal committee meeting on the matter. Its decision has spared Shin, Kyobo’s largest shareholder.
Sources say this might take some time given that both the regulator and the companies do not want to disrupt their services to customers.
The insurers are in a wait-and-see mode.
“We have not yet been notified of the FSS decision. We will just have to wait until the final verdict comes out,” a Samsung Life Insurance spokesperson said.
The decision to punish the three insurers came late Thursday night after the FSS held the meeting for about eight hours.
The controversy over suicide insurance benefits dates back to 2001.
Insurers began selling a policy that included suicide as a disaster in a special clause, promising additional payments.