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September 20, 2017

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S. Korean insurance firms sued for price fixing

SEOUL -- At least 1,500 financial consumers have joined a class action suit against seven major life insurance firms, a spokesman of the Korea Finance Consumer Federation said Sunday.

He said the lawsuit followed the allegation that the seven firms, including Samsung Life, had sought to collect more insurance premiums via price fixing.

Samsung Life saw the most complaints as about 600 policyholders participated in the suit, followed by Kyobo Life Insurance Co. with about 360 and Hanwha Life Insurance with about 330.

The rest were clients of Tongyang Insurance Co., KDB Life Insurance, Mirae Asset Life Insurance Co. and Dongbu Life Insurance Co.

The KFCF and attorneys are gathering more applicants who are victimized by the life insurance firms' collusion for group actions, KFCF's partner attorney Cho Jeong-hwan said.

The insurance-monitoring organization expects that its legal assistance and low legal service expenses — 30,000 won per plaintiff — will lead more people to participate in the class action.

Through the class action, the plaintiffs are seeking damages for the insurance firms' cartel for designating the expected interest rate, a crucial factor in calculating individuals' life insurance premiums.

The expected interest rate is inversely related to the insurance cost, and applicants with fewer health risks generally receive higher interest rates. The 1,500 clients claim that the insurance companies have been manipulating the rate to gather bigger profits for themselves.

According to court records, big-name life insurance firms, including Samsung Life Insurance, Hanwha Life Insurance and Kyobo Life Insurance Co., are involved in the legal battle.

"The first instance of each class action against these firms will take about one year," the KFCF said in an online statement.

The class-action began after 12 major life insurance companies were fined a total of 365.3 billion won (US$315 million) in 2011 by the Fair Trade Commission for colluding to set the expected interest rate between 2001 and 2006.

The nation's antitrust watchdog said that six major companies, including Samsung Life Insurance, Korea Life Insurance and Kyobo Life Insurance Co., took the lead in the cartel.

The FTC applied a 157.8 billion won penalty against Samsung, 134.2 billion won on Kyobo, 48.6 billion won on Korea, and 6.6 billion won on Allianz. Hengkuk was fined 4.3 billion won and Shinhan 3.3 billion won.

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