Samsung Life, FSS battle over compensation

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Samsung Life, FSS battle over compensation

Korea’s financial watchdog and Samsung Life Insurance are clashing over whether to compensate policyholders over service fees not mentioned in contracts.

The insurance giant could have to return a total of 400 billion won ($352.4 million) to its clients.

The Financial Supervisory Service said last week that Samsung Life Insurance deducted a part of a payout as a working expense without specifically mentioning this in the contract.

Earlier this year, a policyholder of the insurer’s immediate annuity plan filed a complaint with the Financial Supervisory Service that claimed that the insurance payout he received was lower than specified in his contract.

An immediate annuity is a contract that is purchased with a single lump-sum payment and starts paying a guaranteed income almost immediately.

The regulator sided with the policyholder and ordered the life insurer to return the disputed amount. Samsung Life Insurance paid the money he claimed.

FSS Gov. Yoon Suk-heon is now pressing Samsung Life Insurance to compensate holders of the policy affected, which could cost the insurer up to 400 billion won.

“We will apply the compensation to all of those who enrolled in the same coverage so that they can receive the insurance that has not been paid,” Yoon said in July.

“If a company won’t comply with the rule by July, the Financial Supervisory Service will launch an investigation,” he said.

His comment also put other insurers on edge as some of them also did not mention service fees they deducted in their contracts.

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