The insurance industry regulator of South Korea has issued warnings and threatened severe penalties against several life insurers over their refusal to pay suicide benefits to their policyholders.
The Financial Supervisory Service (FSS) has warned Samsung Life Insurance, Hanwha Life Insurance, Kyobo Life Insurance and Allianz Life Insurance that they could face heavy disciplinary actions such as expensive fines, termination of executives, and even suspension of business.
The four insurers have been notified and are required to submit their explanatory documents before December 8. Based on their explanations, the FSS will decide on the penalties.
In 2014, the FSS initiated an investigation into life insurers’ operations and it found that several companies have refused to pay suicide benefits. Some insurers said that the suicide coverage was mistakenly included in their contracts so they can refuse to pay benefits. However, the FSS insisted that even if there was a mistake in the terms and conditions, insurers must follow the clauses.
The Supreme Court favored the insurers, saying they “need not provide suicide benefits once statute of limitations runs out.” But the FSS pushed through with its plan to impose punitive measures against the insurers regardless of the court’s ruling.
Several insurers have already been slapped with fines, including MetLife Insurance, Heungkuk Life, Shinhan Life, PCA Life, and Chubb Life.
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