KB Life Insurance has been penalized a total of 20 billion won (approximately $15 million) by the Financial Supervisory Service (FSS) for failing to adequately compare and explain existing insurance policies. Industry experts express concerns that unhealthy sales practices, including unfair replacements, may increase as competition among agents heats up ahead of the implementation of the '1200% rule'.
According to the insurance industry on June 24, the FSS imposed a fine of 15.46 billion won and an additional penalty of 500 million won on KB Life on June 17. This action follows the results of a regular inspection conducted by the FSS in September 2024.
The inspection revealed that KB Life violated regulations by improperly terminating existing insurance contracts and failing to meet consumer protection standards during the contract signing process. Such actions are considered significant unhealthy sales practices that infringe on the rights of insurance consumers.
Multiple violations were also identified regarding adherence to basic documentation requirements. These included breaches during the processing of insurance claims and premium waivers. Additionally, the company was found to have improperly underwritten simplified review insurance and violated principles related to premium rate calculations and basic document management, totaling six regulatory infractions.
In a public statement, KB Life acknowledged the issues and pledged to take corrective measures to prevent similar incidents in the future.
Meanwhile, complaints related to unfair replacements submitted to the FSS totaled 211 in the first quarter of this year, marking a 54% increase from 137 in the previous quarter. An industry insider noted, "As the GA market has grown around the competition for securing agents, it is likely that the competition for talent will remain intense until the '1200% rule' is implemented, raising concerns about the risks of unfair replacements and incomplete sales practices."
* This article has been translated by AI.
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