South Korea’s Hanwha Life Insurance Co. became another industry major to defy an administrative remedial order to reimburse underpaid payment to annuity policymakers, a move that could prompt other life insurers to follow suit.
Hanwha Life on Thursday sent a statement to the Financial Supervisory Service (FSS) that it cannot accept the regulator’s order on a sweeping refund program to address a single complaint. “After seeking advice from a number of outside legal experts, we have decided that further legal examination and interpretation is needed on the contract terms,” it said.
The industry’s second largest follows a similar move by Samsung Life Insurance, the industry’s largest, which claimed it could not comply with the FSS order for universal reimbursement to 55,000 clients based on a single client’s complaint.
The FSS order came after it sided with a policymaker’s complaint that he should have been paid minimum 2.5 percent per annum for his contribution to immediate annuity plan, but did not get that much.
The regulator accused Samsung Life of deducting part of payout as working expenses without mentioning the term in the contract and ordered the company and other life insurers to correct their payments. Under the new order, Samsung Life would have to pay out 430 billion won extra ($384 million) and Hanwha 85 billion won to 25,000 clients.
An immediate annuity is a type of annuity that provides regular income to a client who purchases the plan with single lump-sum payment. Payouts are paid out monthly at fixed rate a month after the contract is signed.
Samsung Life has already said it would challenge the FSS at the court. Hanwha Life said it will defer payment decision until the court ruling.
By Park Man-won and Choi Mira
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]