That implies insurers are in great disadvantage and thus need to come up with ways to minimize losses from lawsuits by, for example, settling out of court instead of wasting time and money fighting. ( image by Chris Potter at Flickr)
SEOUL, South Korea, Sept 28 (Korea Bizwire) – In as many as seven cases out of ten in which a customer sues an insurance company, the defendant lost. As for the cases where an insurance company sues a customer, the success rate was only two thirds, meaning the corporate plaintiff lost 33 percent of times. That implies insurers are in great disadvantage and thus need to come up with ways to minimize losses from lawsuits by, for example, settling out of court instead of wasting time and money fighting.
According to data submitted by the Financial Supervisory Service on September 16 at the request of Congressman Kim Jae-kyung (New Frontier Party), Korea’s 39 insurers–16 property and casualty insurance companies and 13 life insurance companies–were sued by their customers for 3,899 times last year. Most of these cases involve disputes surrounding insurance benefits. The number of lawsuits a year has been steady for years, including 3,723 in 2009, 4,199 in 2010, and 3,886 in 2011. During the first six months of this year, the number has been 1,943.
Between property & casualty insurance and life insurance, the former has a much higher rate of defeat at 75.8 percent. For example, the lost lawsuit rates for Hyundai Hi-car Direct and Lotte Insurance for 4 and a half years from 2008 to the first half last year have been 95 and 100 percent, respectively. Other companies, including Edu-Car (88%), Nonghyup Insurance (85%), AXA Insurance (88%), and Ergo Daum (86%) had equally high failure rates. The reason property & casualty insurers have had pathetically high rates of losing lawsuits may have to do with the fact that they tend to hold out to the last minute not to pay out insurance benefits going all the way in the court.
As for the life insurance industry, the average loss rate is slightly below the 50-percent level, with Woori-Aviva Insurance recording the highest loss rate of 55 percent. Samsung Life, the No. 1 company in the life insurance business, boasted a low rate of 41 percent. Congressman Kim, who revealed the insurance litigation data, said, “Insurance companies need to cut legal cost by minimizing the number of lawsuits they raise while not giving reasons for customers going to the court. That must be one of the important ways for the insurers to improve their service to customers.”
