CONTENTS
- 1. The Client Who Requested Assistance From the Insurance Attorney
- - Detailed Background of the Case
- 2. Assistance Provided by the Insurance Attorney
- - Establishing the Interpretation of the Law and Criteria for Its Application
- - Advisory on Internal Processes and Disclosure Procedures
- - Establishing a Strategy for Dispute Prevention and Supervisory Response
- 3. Results of the Insurance Attorney Advisory
- 4. The Insurance Business Act Explained by an Insurance Attorney
- - Timing of Application and the Duty to Provide a Comparative Explanation
- 5. FAQ From an Insurance Attorney
- - If You Need Assistance
1. The Client Who Requested Assistance From the Insurance Attorney
The client who came to the insurance attorney requested assistance in order to prevent the risk of being mistaken for improper contract switching in the course of explaining the conversion of an existing insurance product.
Detailed Background of the Case
The client in this matter is a domestic insurance company, which recognized that, in the course of launching a new product, the explanation for converting an existing product could be mistaken for improper contract switching.
In the course of explaining the conversion to a product whose coverage structure was similar to that of the existing contract, the scope and procedures of comparative disclosure were unclear, which raised concerns about internal risk.
In particular, there was concern that omissions in disclosure by some solicitation personnel could lead to sanctions by the supervisory authority.
Accordingly, the client requested the assistance of an insurance specialist attorney in order to prevent the risk of improper contract switching.
2. Assistance Provided by the Insurance Attorney
The principal issues in this matter were as follows.
▷ The scope of the company's responsibility for omissions in disclosure by solicitation personnel
▷ Establishing an internal system of proof in preparation for the risk of sanctions by the supervisory authority
The client had experienced confusion in practice because its internal standards were ambiguous, and there was a risk of sanctions by the supervisory authority.
Accordingly, the insurance attorney conducted the advisory work with a focus on clarifying the interpretation of the law, improving internal procedures, and establishing a dispute-prevention system.
Establishing the Interpretation of the Law and Criteria for Its Application
Based on Article 97 of the Insurance Business Act and interpretive precedents of the Financial Supervisory Service, the insurance specialist attorney specified the criteria for determining improper contract switching.
The attorney broke down whether a duty of comparative disclosure arose according to the degree of similarity between the new product and the existing product in coverage structure, insurance period, refund rate, and other factors.
On this basis, the attorney prepared a practical reference table that the company could use to make autonomous judgments, thereby minimizing uncertainty.
Advisory on Internal Processes and Disclosure Procedures
The attorney comprehensively examined the client's product-conversion procedures and supplemented the steps that could be omitted in the course of customer disclosure.
The attorney designed a step-by-step procedure manual and an inspection checklist so that solicitation personnel could consistently fulfill their disclosure obligations.
In addition, the attorney improved the structure so that disclosure records would be automatically recorded in the computer system, thereby assisting the client in securing the ability to prove compliance during inspections by the supervisory authority.
Establishing a Strategy for Dispute Prevention and Supervisory Response
In preparation for inspections and complaint responses by the supervisory authority, the insurance specialist attorney prepared a response manual that organized anticipated questions and proposed answers.
The attorney organized and shared a casebook arranged by issue related to improper contract switching, and established a system that could immediately reflect any future change in the rules.
Through this, the client company established internal standards that enabled a prompt and consistent response even to inquiries or inspections by the supervisory authority.
3. Results of the Insurance Attorney Advisory
Through the advice of the insurance attorney, the client was able to bring its new-product conversion procedures into line with the law and to resolve the risk of sanctions arising from improper contract switching.
In addition, the disclosure standards for solicitation personnel became clear, internal risk was reduced, and the company's compliance was recognized as appropriate even in inspections by the supervisory authority.
4. The Insurance Business Act Explained by an Insurance Attorney
The central legal basis in this case is Article 97 of the Insurance Business Act.
Article 97 is a provision established to protect policyholders and insured persons during the conclusion or solicitation of insurance contracts and to prohibit unfair practices.
In this case in particular, the prohibition of improper contract switching (Article 97, Paragraph 1, Subparagraph 5 of the Insurance Business Act) was the main issue.
If the comparative explanation is insufficient during the process of switching to a product with the same coverage structure, insurance period, refund rate, and the like, the act may be deemed an improper contract switching.
Timing of Application and the Duty to Provide a Comparative Explanation
If an existing insurance contract is terminated within one month after the conclusion of a new contract, or if the existing contract is terminated within one month after the application for a new insurance contract, the duty to provide a comparative explanation must be fulfilled.
However, an exception applies where the policyholder sufficiently understands the possibility of loss and consents through means such as a handwritten signature.
In addition, when an existing insurance contract is terminated within six months after its termination, or within six months after the application for a new insurance contract, key comparative matters such as the insurance period, refund rate, and projected interest rate must be compared and explained.
If this process is not observed, the contract may be recognized as an improper contract switching and may become subject to contract cancellation or legal sanctions.
5. FAQ From an Insurance Attorney
A. To protect policyholders and ensure a fair solicitation environment, Article 97 of the Insurance Business Act prohibits the following practices.
ㆍ Solicitation of a contract by a person who is not the actual named party
ㆍ Conclusion of a contract without the policyholder's consent
ㆍ Signing on behalf of another without a handwritten signature, or having another person sign
ㆍ Using the name of another solicitation worker
ㆍ Inducing an application for a contract by using a money-lending relationship
ㆍ Refusing insurance enrollment for persons with disabilities
ㆍ Obstructing the withdrawal of an application for, or the cancellation of, a contract
A violation may give rise to legal risks such as contract cancellation, a claim for reinstatement, and sanctions by the supervisory authority.
A. A company should improve its internal procedures and control systems and prevent prohibited practices during the solicitation process through explanatory manuals, checklists, and training programs.
Through regular reviews and records management, a company can respond promptly and consistently even during inspections by the supervisory authority or in dispute situations.
If You Need Assistance
During the process of concluding a new insurance contract similar to an existing one, if the comparative explanation is insufficient, the policyholder may suffer a disadvantage, and this carries the risk of being deemed an improper contract switching.
In such situations, it is important for a company to accurately understand the legal standards and internal procedures and to manage them systematically.
This firm closely reviews the relevant statutes, the authoritative interpretations of the supervisory authority, and existing precedents in order to establish concrete guidelines and procedures that can be applied in actual practice.
In addition, through practical measures such as designing the solicitation process, reviewing explanatory materials, and operating internal training programs, the firm manages risk proactively and provides strategies that allow for a prompt and systematic response if a problem arises.
If you need assistance in a situation similar to the case above, 🔗Legal Consultation Booking is available, and we invite you to request our help.
This content is based on actual case studies of Daeryun Law LLC with some adaptations, and the copyright belongs to our firm.
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