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Irregularities plague brokerages, insurers

The number of irregular business practices in the securities and insurance sectors, has surged this year, financial regulators revealed on Friday.

According to the Financial Supervisory Service, 29 securities firms’ headquarters or branches were sanctioned in the first half of the year for breaching regulatory rules.

They included Samsung Securities, Woori Investment & Securities, Kyobo Securities, Daishin Securities, SK Securities, Hana Daetoo Securities and NongHyup Securities.

The FSS also reprimanded 23 insurance firms involving branches for their irregular sales activities between January and June.

Among the rule perpetrators in the life and nonlife insurance sector were Tongyang Life, Hanwha Life, Hanwha General, Heungkuk Life, PCA Life, Shinhan Life, Prudential Life and LIG.

Three life insurance firms ― Hanwha, Tongyang and Mirae Asset ― were implicated in irregular accounting practices involving promotion expenses for their “bancassurance” business.

The FSS issued sanctions, such as “reprimands” and “cautions,” against 12 executives and employees of the three insurance firms for failing to record extraordinary payments to banks on their financial statements.

There were two incidences of embezzlement of 1.39 billion won ($1.24 million) involving employees of Woori Investment & Securities.

The FSS issued a caution against Hanwha General Insurance for allegedly seeking to conceal the hacking of customers’ information.

Though the nonlife insurance unit of Hanwha Group saw the leak of about 157,000 clients’ personal information due to a hacking incident between March and May 2011, it hid that fact for at least one year until September 2012.

The Korean unit of American International Assurance was found to have overcharged insurance premiums worth about 2.8 billion won for more than 1 million cases.

Meanwhile, the FSS said there were 14 cases of irregular practices in the commercial banking sector and seven among credit card issuers over the corresponding period.

By Kim Yon-se (
Korea Herald Youtube