Samsung Life Insurance Loses First Trial on 400 Billion KRW Immediate Annuity Case (Comprehensive)

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[Asia Economy Reporter Ki Ha-young] Following Mirae Asset Life, Tongyang Life, and Kyobo Life, Samsung Life also lost the first trial in the immediate annuity unpaid amount lawsuit.

According to the legal and insurance industries on the 21st, Samsung Life lost the first trial of the joint lawsuit filed by the Korea Financial Consumer Federation (hereafter KFCF) in October 2018, which collected cases of victims related to Samsung Life's immediate annuity. The scale of Samsung Life's unpaid immediate annuity amounts is about 400 billion KRW.

Immediate annuity is a product where subscribers deposit a lump sum and start receiving monthly insurance payments in the form of an annuity from the following month. The plaintiffs are 'inheritance maturity type' subscribers who receive annuities for a certain period and then get the principal refunded upon maturity.

Life insurance companies selling immediate annuities, including Samsung Life, calculate the monthly annuity amount by applying the declared interest rate to the net premium (the premium paid minus business expenses), deducting a portion to prepare the maturity refund funds for maturity-type subscribers.

Subscribers filed complaints with financial authorities in 2017, claiming that such deductions were not specified in the terms and conditions and that the insurance companies did not provide clear explanations, leading to disputes over unpaid immediate annuity amounts.

The Financial Supervisory Service's Dispute Mediation Committee decided that insurance companies must pay the underpaid insurance money, and the FSS recommended that insurance companies pay the remaining subscribers as well. However, Samsung Life, Hanwha Life, Kyobo Life, Tongyang Life, Mirae Asset Life, and KB Life refused, leading to litigation. The scale of the immediate annuity unpaid amount dispute identified by the FSS in 2018 was 160,000 people and 800 billion to 1 trillion KRW. Among them, Samsung Life had the largest share with 50,000 people and 400 billion KRW. Hanwha Life and Kyobo Life were identified with 85 billion KRW and 70 billion KRW, respectively.

KFCF stated, "The plaintiff's victory in the joint lawsuit for the return claim of unpaid immediate annuities is a natural result," adding, "We expect plaintiff victories in other insurance companies' joint lawsuits as well and hope for voluntary payments from life insurance companies."

Previously, Mirae Asset Life, Tongyang Life, and Kyobo Life also lost in the first trial related to unpaid immediate annuities. They appealed the first trial results. Samsung Life plans to respond after receiving the judgment. A Samsung Life official said, "We have not yet received the judgment," and "We will review specific measures after receiving the judgment."

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