Hanwha Life faces setback in digital biz
Uncertainty lingers over Hanwha Life Insurance’s new digital projects as the insurer faces financial authorities’ sanctions over irregularities that surfaced in inspections last year.
According to the Financial Supervisory Service (FSS), Hanwha Life provided illegitimate benefits in the opening of a Hanwha Galleria Duty Free shop at the 63 Building on Yeouido in Seoul. The FSS said Hanwha Life covering renovation costs for the duty free shop violated regulations that limit transactions among group affiliates.
The FSS notified Hanwha Life it could receive an institutional warning, which is considered a weighty penalty. Firms that are hit with this sanction are limited in new acquisitions, and any new businesses that require approval from authorities are put on hold for a year.
The supervisory agency is set to discuss Hanwha’s sanction on Aug. 20. This comes after the FSS and Hanwha Life discussed the issue on July 22, but failed to reach an agreement.
The FSS will reach a conclusion on the sanction after a series of meetings with the company, which is forwarded to the Financial Services Commission which finalizes the penalty.
If Hanwha Life is issued an institutional warning, it will bar the company from pushing forward with new projects at a crucial time. The sanction is set to be imposed at a time when Hanwha’s life insurance unit is focusing on new business opportunities amid a digital transition.
The insurer, which had been highly conservative, conducted a digital-centered organizational overhaul in June, under the leadership of Kim Dong-won, second son of Hanwha Group Chairman Kim Seung-youn. The junior Kim is the chief digital strategy officer of Hanwha Life.
The company segmented its organization into more divisions and teams, assigning 60 percent of them with digitization tasks and new projects.
The organizational changes are seen to have been made to facilitate new attempts and accelerate existing efforts to strengthen capabilities in the digital era.
The insurer has shown interest in the “my data” business, through which financial firms and fintech companies will enable users to receive analysis on a broad scope of personal data, under users’ consent to financial firms obtaining their data. Users also will be able to view their data stored at banks, card firms and hospitals at a glance.
A setback in the business, for which most major financial firms and fintech players are preparing, will likely deal a blow to Hanwha Life, as agile execution is considered crucial in digital businesses.
The expected penalty poses another additional burden, because the insurer already received an institutional warning in 2017, over unpaid claims for deaths by suicide. Three institutional warnings can lead to a periodical suspension of business operations.
Hanwha Life declined to comment on the issue, Sunday, citing the review over the sanctions is ongoing. Hanwha Life is one of the top three life insurers here.