Samsung Life defies FSS, sues policyholderSamsung Life Insurance filed a suit on Monday against a client who claimed the company overcharged him, escalating tensions with Korea’s financial watchdog.
The country’s largest life insurer said that it filed a civil suit with Seoul Central District Court to nullify the policyholder’s demand for compensation, which was initially filed with the Financial Supervisory Service (FSS).
The financial regulator ruled last month that Samsung Life Insurance deducted part of a payout as a working expense without specifically mentioning it in the contract and said that the company must compensate other holders of the same insurance policy.
The move follows the board of directors’ decision to defy the FSS’s ruling. The insurance company said that it will turn to the courts to make a ruling on the issue.
“If the court rules in favor of the client, we will issue full compensation, regardless of the statute of limitations,” said the company in a statement.
Last year, a holder of Samsung Life’s immediate payment annuity plan filed a complaint with the FSS on the grounds that annuities must deliver returns of 2.5 percent on the principal. After Samsung levied the fees, the returns dropped below 2.5 percent. Clients buy immediate payment annuity plans with a single, lump-sum payment, and the insurer pays a guaranteed income to the client starting about a month after the contract is signed.
The FSS also required other insurers to compensate policyholders if they didn’t specifically mention the deductions in their contract terms.
Hanwha Life Insurance reported to the FSS last week that it won’t follow the order and said that they must be confronted with sufficient legal grounds before they offered compensation.
BY PARK EUN-JEE [email@example.com]