|
|
|
|
|
Newsletter | May 2014, Issue 2 |
|
|
|
|
|
|
INSURANCE |
|
|
|
Amendments to Insurance Section of Korean Commercial Code |
|
|
|
On February 20, 2014, certain proposed amendments to the Insurance Section of the Korean Commercial Code (“Amendments”) were passed at a plenary session of the National Assembly and the Amendments will come into force on March 12, 2015, one (1) year after its announcement by the President. The key points of the Amendments are summarized below. |
|
|
|
The insurer’s existing obligation to inform the policyholder of important terms of the insurance contract has been stipulated in the Amendments. The insurer must explain the terms of the insurance contract to the policyholder and, when failing to do so, the policyholder will be entitled to terminate the contract within three (3) months from the date on which the insurance contract was entered into, extending the period of the right to exercise cancellation (amended Article 638-3). |
|
|
|
The Amendment specifies the authority and powers of insurance agents. Thus, an insurance agent is granted with the right to receive insurance premiums, to deliver insurance policies, to notify or receive a declaration of intent including subscription, termination, etc. Also, insurance brokers that conduct an insurance brokerage business for a specific insurer have the right to receive the insurance premium (when it provides the receipt issued by an insurer) and the right to provide an insurance policy. Meanwhile, the internal agreement of limiting the rights of insurance agents between the insurer and the insurance agent shall not apply to a policyholder who does not know of such limitation (newly enacted as Article 646-2). |
|
|
|
The statute of limitations period for the right to claim payment of insurance proceeds or the return of unearned premiums or reserves is extended from two (2) years to three (3) years (amended Article 662). |
|
|
|
An insurer providing liability insurance shall not be liable for an increase in the amount of damages caused by failure of the insured to notify the insurer in a timely manner; however, in the event that the insured has previously provided notice to the insurer of the occurrence of an insured event, then the insured is not obligated to provide additional notice to the insurer (amended Article 722). |
|
|
|
In the event that a policyholder of a group life insurance policy designates a person who is not an insured (including his/her legal heir(s)) as a beneficiary, then the policyholder must secure the prior written consent from the insured to designate such beneficiary unless the constituent documents of such group specify otherwise (newly enacted as Article 735-3 (3)). |
|
|
|
Insurers will need to take appropriate actions, such as amending the relevant terms and conditions of the insurance policy forms and checking the underwriting guidelines and internal business processes and control systems to address the changes made in the Amendments. |
|
|
|
Back to Main Page |
|
|
|
|
|
If you have any questions regarding this article, please contact below: |
|
|
|
|
|
|
|
For more information, please visit our website: |
|
|
|
|
|
|
|