News eDaily24 May 2017

South Korea:Insurers receive lighter penalties over suicide cases

24 May 2017

South Korea's financial regulator has eased penalties against the nation's top three life insurers over unpaid suicide insurance benefits.

Kyobo Life Insurance was ordered to halt operations for one month, while Samsung Life Insurance and Hanwha Life Insurance received a warning and were both banned from making inroads into new businesses for one year, the Yonhap News Agency reported, citing the Financial Services Commission (FSC).

Financial authorities had originally planned to order all three insurers to halt operations for up to three months, but the penalties were softened after they decided to pay the overdue suicide insurance benefits.

More than 10 life insurers in South Korea had sold policies for accidents that cover disaster-related deaths as well as suicides between 2003 and 2010 before the terms of the policies were amended to exclude suicide. Under the previous contract terms, the families of policyholders who commit suicide received far higher payments than those who died of natural causes or accidents.

But insurers had at first denied the payouts, arguing that the suicide provision was incorrectly inserted into the contract and that payments for suicide would encourage people to kill themselves.

The issue erupted in 2014 when the financial authorities ordered ING Life Insurance's Korean unit to pay overdue suicide insurance benefits. 

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