KB Life Faces $20 Million Penalty for Improper Policy Practices

KB Life Insurance has been penalized a total of 20 billion won (approximately $15 million) by the Financial Supervisory Service (FSS) for engaging in improper policy switching practices. As the insurance industry prepares for the implementation of the '1200% rule,' concerns are growing about unhealthy sales practices, including improper policy switching, amid intensified competition for agents.

According to the insurance industry on June 24, the FSS imposed a fine of 15.46 billion won and an additional penalty of 5.24 billion 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 comply with consumer protection rules, including the obligation to provide explanations during the contract signing process. These actions are considered significant violations that directly infringe on the rights of insurance consumers.

Multiple violations were also identified regarding adherence to basic documentation requirements. Instances of non-compliance were found in the processing of insurance claims and premium waivers. Additionally, there were violations related to improper underwriting of simplified review insurance and failure to comply with principles for calculating insurance rates and managing basic documentation, totaling six regulatory infractions.

In a public statement, KB Life acknowledged the findings and pledged to take corrective measures to prevent similar incidents in the future.

Meanwhile, complaints related to improper policy switching 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 competition for securing agents, it is likely that the competition for talent will remain fierce until the implementation of the 1200% rule, raising concerns about the risks of improper sales practices, including policy switching."