South Korea's state financial watchdog on Thursday lowered the level of administrative punishment against the nation's leading life insurers -- Samsung and Hanwha -- accused of refusing to pay suicide claims.
The Financial Supervisory Service's decision has effectively cleared an obstacle for Samsung Life CEO Kim Chang-soo's bid to stay in office. Kim, whose tenure ends next week, is poised to be re-elected at the upcoming shareholder meeting.
Last month, the FSS decided to issue a "disciplinary warning" against Kim and Hanwha Life Insurance's CEO Cha Nam-gyu, which requires approval from the Financial Services Commission, the government's top financial regulatory arm.
Under relevant regulations, those with such a penalty can't assume the executive post of financial firms here for three years.
Days later, Samsung and Hanwha announced belated plans to pay all overdue suicide claims in an apparent bid to avoid a set of tough punitive measures also including the suspension of partial business operations for up to three months.
The FSS said the punishment against the CEOs was commuted to a "precautionary warning," one notch lower than the previous one, in consideration of their payment of the claims. Technically, it does not affect the job security of a CEO.
Samsung and Hanwha will also face "institutional warnings" instead of a punishment related to their business operations.
The insurers and their local rival Kyobo sold controversial products in the 2000s with a special contract attached to recognize suicide as a disaster-related death.
But they turned down insurance claims by the bereaved families of policy holders who committed suicide amid controversy over whether suicide is actually associated with a disaster.
Although the Supreme Court ordered them to pay the claims in a 2007 landmark ruling, they maintained a tepid attitude, arguing the two-year statute of limitations had already expired.
They cited another ruling by the court in 2006 that the insurers have no obligation to pay claims beyond the statute of limitations.
Kyobo and its CEO Shin Chang-jae earlier received a relatively low level of punishment in the previous ruling, as the firm expressed the intention shortly before the FSS's related panel meeting to settle some of the suicide claims. (Yonhap)