SEOUL, Feb. 23 (Korea Bizwire) – South Korea’s financial regulator on Thursday ordered three insurance firms to halt some of their operations as a punitive measure over their overdue suicide insurance benefits.
The three insurers — Samsung Life Insurance, Hanwha Life Insurance and Kyobo Life Insurance — have been criticized for failing to pay out death claims for subscribers who committed suicide.
The chief executives of the three insurers also received a warning from the Financial Supervisory Service, the FSS said.
Under the punitive measure, some of the operations of Samsung Life will be suspended for three months.
Some operations of Hanwha Life and Kyobo Life will be suspended for two months and one month each.
Kyobo Life received the weakest penalty, as it pledged to pay out all of its overdue suicide insurance benefits, according to the FSS.
More than 10 life insurers had sold policies for accidents that cover disaster-caused deaths as well as suicides between 2003 and 2010 before it changed the terms of the policies to exclude suicide.
Under the previous contract terms, the families of policyholders who commit suicide received far higher payments than those for general death.
But insurers 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.