Regulator to announce insurance reform plan in December

SEOUL, Sept. 20 (Yonhap) -- The financial watchdog said Thursday it will announce a comprehensive plan in December to reform unfair business practices by the insurance industry.

Yoon Suk-heun, governor of the Financial Supervisory Service (FSS), made the remarks at a meeting with eight outside experts who lead a task force to address deep-seated structural problems at insurance firms.

Consumer complaints against insurance firms have risen due to "imperfect" sales of insurance products and refusals of insurance claims, Yoon said.

"It appears that bold reforms are needed in overall insurance business practices," Yoon told the meeting, according to a statement released by the FSS.

Yoon has called on insurance firms to make more efforts to clarify their policy clauses, saying that consumers have a hard time understanding some of them.

The call was made at a time when some insurance firms are in a dispute with customers over immediate payment annuities.

Last month, the FSS said it will "take necessary measures" after Samsung Life Insurance Co. partly refused to accept the watchdog's advisory to guarantee minimum returns for immediate payment annuities.

In July, Samsung Life decided to partly compensate about 55,000 clients of its immediate payment annuities over a payout dispute, defying the advisory by the Financial Supervisory Service (FSS) to make full compensation.

A client buys an immediate payment annuity with a single, lump-sum payment, and an insurer pays guaranteed income to the client about a month after the contract is signed.

Last year, a client of Samsung Life's immediate payment annuity filed a complaint with the FSS, claiming that the insurer must guarantee minimum returns of 2.5 percent per annum.

The minimum returns were used to calculate guaranteed income of the annuity contract but were not specifically mentioned in the contract, according to FSS officials.

kdh@yna.co.kr
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