SOUTH KOREA - Financial regulators have decided to slap fines of up to 260 million won (S$297,000) on the Korean unit of American International Assurance for business irregularities, industry sources said Monday.
The sources said the firm's irregular business practices included the "overcharge of insurance premiums" worth about 2.8 billion won for more than 1 million cases.
AIA Life, or AIA Group Limited Korea and formerly AIG Life, had stipulated that it would offer a 2 per cent discount for payment of premiums via automatic withdrawal.
"The Financial Supervisory Service has revealed that the firm overcharged policyholders who applied for the automatic transfer, without offering them the premium discount between 2007 and 2011," said a source.
The FSS has decided to order the insurer to reimburse policyholders.
The regulator ? in consultation with the decision-making Financial Services Commission ? plans to issue an "institutional warning" against AIA Life and levy fines of 220 million won.
Other fines worth about 40 million won will possibly be added due to other practices, and several of its salespeople could be subject to suspension of their duties, sources said.
As one example, the firm failed to inform policyholders of changes in terms between preexisting insurance products and updated products when customers sought to renew contracts.