Court Ruling Likely to Affect Other Suits
The Seoul High Court ruled in favor of Samsung Life Insurance in its immediate annuity-related litigation on Nov. 23, after the company had lost the first trial against plaintiff customers. The appellate court ruled that ambiguous insurance clauses cannot be a reason for having to pay insurance money.
The litigation originated from the complicated structure of the insurance product. This product is characterized by providing a monthly pension starting from one month after a lump sum is deposited. For example, a person pays 100 million won, an insurer pays interest each month while running the fund, and then the insurer returns 100 million won at the maturity.
The domestic life insurance companies including Samsung have calculated the monthly interest (pension) by applying the disclosed interest rate to the net premium and then subtracting what is to be paid at maturity. The plaintiffs claimed that this deduction is not stipulated in their insurance policies and the company never clarified it.
The court, however, ruled that the payment from the company to the customers must and can be calculated based on the table that is a part of the policies, the application of the disclosed interest rate is not supposed to mean insurance payment equivalent to 100 percent of the rate, and Samsung gave enough information without incomplete sale.
At present, similar lawsuits are ongoing between consumers and Samsung, Hanwha, Kyobo, Tong Yang, Mirae Asset and KB Life Insurance. The combined scale is estimated at 160,000 consumers and approximately one trillion won. Samsung Life Insurance alone accounts for 50,000 and 430 billion won or so.