Gov’t softens penalties on insurers

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Gov’t softens penalties on insurers

Korea’s top financial regulator softened penalties against the chief executives of two local insurers for underpaying suicide claims on Thursday.

The Financial Supervisory Service downgraded its warning against Samsung Life Insurance CEO Kim Chang-soo and Hanwha Life Insurance CEO Cha Nam-gyu from “disciplinary” to “precautionary.” The disciplinary warning would have barred them from holding top offices at financial institutions in Korea for three years. Kim’s term at Samsung Life ended in January this year, while Cha’s term ends next March.

“The Financial Supervisory Service took into consideration the companies’ efforts to settle the matter by agreeing to pay all insurance claims from suicide,” the regulator said in a statement.

The two insurance companies, along with Kyobo Life Insurance, were under fire for refusing to provide accidental death insurance benefits in the early 2000s to those whole held their policies, which identified suicide as death from disaster.

The Financial Supervisory Service on Feb. 25 ordered Samsung Life Insurance, Hanwha Life Insurance and Kyobo Life Insurance to suspend some of their operations for two to three months and pay a fine of up to 890 million won ($785,870).

That same day, Kyobo Life decided to pay out all suicide claims worth 67.2 billion won, sparing its CEO Shin Chang-jae from the more severe disciplinary warning.

But Samsung Life and Hanwha Life waited before paying out all pending claims, which amounted to 174 billion won and 91 billion won each.

The penalty revision awaits final approval from the governor of the Financial Supervisory Service, Zhin Woong-seob, as well as the Financial Services Commission, Korea’s other financial regulator.

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