Insurer to pay suicide claims

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Insurer to pay suicide claims

The board of Samsung Life Insurance, the country’s largest insurer, voted to pay all insurance claims from suicide on Thursday, yielding to escalating pressure from Korea’s financial watchdog.

The insurer said that it will pay 174 billion won ($152 million) for 3,337 unsettled cases, in accordance with a decision made during an emergency board meeting. The compensation includes both the principal and interest for the delayed payout.

“The decision is intended to protect consumer rights and restore trust,” a Samsung Life spokesperson said. “We will pay as early as possible.”

The move comes after the Financial Supervisory Service announced unusually strong penalties on three major life insurers - Samsung, Hanwha Life Insurance and Kyobo Life Insurance - for refusing to give accidental death insurance benefits. Those insurers stipulated that suicide will be recognized as accidental death but later said that taking one’s own life cannot be covered, instigating a series of lawsuits by policyholders.

The financial watchdog slapped Samsung Life with a suspension for three months and sent the most severe warning notice to its CEO and President Kim Chang-soo.

Once the head of a financial company receives a warning from the Financial Supervisory Service, he will not be able to extend his tenure.

Analysts say that the punitive punishment to the CEO kept Samsung Life on alert since Samsung wanted to keep him as the head after his term ended in January.

The extension of his tenure had been postponed, with Samsung delaying its annual reshuffle due to the ongoing investigation into the group and the indictment of Samsung’s de facto leader Lee Jae-yong.

The flashpoint of the dispute between the insurers and the watchdog was whether the companies will fully carry out the obligation on the claims that passed the statute of limitations.

The Supreme Court ruled last year that the insurers are free from payouts beyond the two-year statute of limitations and the insurers used the decision as the basis for their intention to only pay a partial payment. But the FSS remained rigorous, saying that the companies should still pay the claims since suicide was stated in the contracts.

Hanwha Life will hold an emergency board meeting today to decide on the payment of suicide-related claims.

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