In the Financial Supervisory Service's variable life insurance "mystery shopping," Shinhan Life Insurance and KB Life Partners, a subsidiary of KB Life Insurance, received inadequate ratings. The Financial Supervisory Service determined that explanations were lacking on variable life insurance asset management methods and the right to terminate illegal contracts. The Financial Supervisory Service said it would guide the two companies to draw up improvement plans and check their implementation status.
The Financial Supervisory Service said on the 24th that it conducted mystery shopping from Sep. to Nov. last year to check variable life insurance sales procedures at seven life insurers (Samsung, Kyobo, ABL, KDB, MetLife, Shinhan Life, Hana Life) and two corporate insurance agencies (KB Life Partners, Mirae Asset Financial Services), and these results followed. Mystery shopping is a system in which investigators from an external professional institution pose as customers to purchase financial products and evaluate whether sales procedures and the like are appropriate. It is limited to system improvements and recommendations without disciplinary or other sanctions based on evaluation results.
Evaluations on 24 items across five categories found Samsung, Hana, Kyobo, KDB, and ABL Life rated the highest, excellent (90 points or higher). Mirae Asset Financial Services was good (80 points or higher), MetLife was average (70 points or higher), and Shinhan Life and KB Life Partners were inadequate (60 points or higher). No institution received a poor rating below 60 points.
The Financial Supervisory Service said it conducted mystery shopping because overheated performance competition among life insurers has raised the risk of misselling. Last year's initial premiums for variable life insurance (the first premium paid after enrollment) were 2.89 trillion won, up 46.2% from the previous year's 1.97 trillion won.
The Financial Supervisory Service noted, "Variable life insurance does not guarantee principal, and insurance benefits or surrender refunds may be less than expected," urging caution before signing up. Variable life insurance invests premiums paid by customers in funds and the like to grow future insurance benefits or annuities. The Financial Supervisory Service advised choosing one of the following based on the purpose of enrollment: savings type (building a lump sum), protection type (preparing for death or illness), or annuity type (building retirement funds).