Allianz Life Insurance Korea Co., a life insurance unit of Germany-based financial services giant Allianz Group, conceded to pressure from local financial authorities and agreed to pay out overdue death claims for the insured who ended his or her life with own hands.

Its decision could persuade other life insurers to follow suit as the Financial Supervisory Service has warned of punitive actions on the insurers deferring payments on death benefits with suicide clause.

Allianz Life after a board meeting on Monday said it decided to pay death insurance claims for suicide cases. According to insurance industry sources, the life insurer’s overdue death benefits for suicides amount to around 60 billion won ($51.4 million).

The FSS on November 28 notified Allianz Life Insurance, Samsung Life Insurance, Hanwha Life Insurance, and Kyobo Life Insurance that it would impose heavy punitive measures against their refusal to pay its policyholders death benefits linked to suicide cases. It warned strong administrative actions like suspension of business, license cancellation, and dismissal of chief executives.

Allianz Life in the middle of sale process cannot afford administrative sanction. In April, China’s Anbang Insurance Group pledged to buy the life insurer and its application to become major shareholder of the Korean firm is under review for government approval. The acquisition could be disapproved if the company is under administrative penalty.

The FSS had probed local life insurers on violating insurance laws related to suicide clause and discovered incompliance cases in 14 life insurance companies. Late last month, four life insurers - Allianz Life Insurance, Samsung Life Insurance, Hanwha Life Insurance, and Kyobo Life Insurance - were notified of possible heavy disciplinary actions and required of explaining their correction plans to FSS by December 8. The financial bureau will determine the level of disciplinary measures against them after reviewing the submitted documents.

The total overdue suicide insurance claims of the four life insurers hover at 420 billion won.

By Park Joon-hyung

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]