Insurers yield to pay partial benefits for suicide claimsMajor insurance companies have bowed to financial authorities’ demands to pay accidental death insurance benefits on claims that have passed the statute of limitations, easing a contentious battle with the regulator.
And yet, an air of tension remains since local insurers opted to pay only some of the benefits.
Samsung Life Insurance, the country’s largest insurer, was the last standing firm on its position of not making payouts to the families of suicide victims whose contracts passed the limitations, but it changed its stance Friday to say it would pay partial benefits.
The compensation is estimated to be around 40 billion won ($34 million) out of total outlays of 160.8 billion won to cover claims made after September 2012, though the scope and specifics of the planned payment will be decided in a board meeting today.
Samsung Life Insurance also said that it could spend another 20 billion won to lead efforts on suicide prevention.
Since the Financial Supervisory Service first demanded insurers provide insurance in September 2014 to the families of policyholders who took their own lives after subscribing to accidental death insurance, the decision to cover the 2012 claims represents submission to the watchdog agency.
Samsung’s decision comes after the Financial Supervisory Service, the country’s financial watchdog, vowed to clamp down on the insurance companies, last month, for refusing to pay suicide-related insurance.
The four leading insurers - Samsung, Hanwha, Kyobo and Allianz - denied payments citing the statute of limitations while the FSS maintained that insurers should still pay because benefits were noted in the contract.
The Supreme Court ruled last year that the insurers are freed from payouts beyond the two-year statute of limitations.
But the FSS raised the possibility of imposing “heavy disciplinary actions” against those insurers with the specific measure set to announce within the month.
Giving in to FSS’s rigorous stance, Hanwha Life Insurance and Kyobo Life Insurance decided to compensate a part of the benefit this month for claims submitted after January 2011.
The two companies’ coverage will amount to around 20 billion won, which accounts for 20 percent of the outstanding amounts related to claims of suicides.
And Kyobo will provide the benefit in the name of “compensation benefit,” rather than insurance, since paying the insurance that the court exempted would trigger other legal issues. Allianz Life Insurance said last month it will pay all benefits requested by the FSS.
The controversy began when the insurers denied pay for suicide victims, although accidental death insurance contracts covered suicide.
The country’s top court ruled in May that insurers could not deny accidental death benefits for suicide if the policy had been issued before April 2010.
Many local insurers changed their definition of accidental death that month to exclude suicide amid the surging number of cases, and applied the new definition retroactively. The court barred the retroactive element of that change, validating the claims if a policy was already in effect.
BY PARK EUN-JEE [firstname.lastname@example.org]