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Newsletter | August 2014, Issue 3
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INSURANCE
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Supreme Court Decision on Judgment Standards for Insurance Products
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Recently the Supreme Court rendered a decision that emergency medical assistance services (“Services”) which are provided by International SOS Korea (“International SOS”) is not an insurance product as defined in the Insurance Business Act (“IBA”).
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The evacuation and repatriation services as part of the Services are to transport members to medical institutions in other regions or repatriate members to their home countries when members who are dispatched overseas are in a severe medical condition (“Evacuation and Repatriation Services”).
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First, the Supreme Court explained the general standards of insurance products as below:
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“Considering that the essence of insurance is to eliminate or mitigate economic risks that can be caused by contingencies, the “purpose of covering risks” as a core element of an insurance product provided by the IBA shall not be easily recognized simply because losses are compensated by the provision of economically valuable benefits, and a determination should be made according to whether such purpose of covering such economic risks is the principal business objectives for which the operation of an insurance business is at issue.”
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Also, the Supreme Court ruled that the Services cannot be viewed as an insurance product because the principal purpose of the Company’s Evacuation and Repatriation services is not to compensate for monetary losses, but to provide evacuation and repatriation services when members dispatched overseas are in a severe medical condition. The Supreme Court based its ruling on the following reasons:
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Evacuation and Repatriation services are not basic compensation for costs that are incurred by transporting a member to a hospital or repatriating a member to the member’s home country, but is a provision of comprehensive and professional services, including assessing medical conditions as to which regional hospital a member is to be transported when in a severe medical condition, decision-making on available evacuation methods, and rendering practical evacuation and repatriation services. Also, professional and subjective decision on whether the services should be provided or not, and if provided, how and when the services should be provided, etc. are made by International SOS as the service provider. Therefore, the Services which are provided by International SOS are determined by its own global networks, knowledge and experiences which are different from insurance benefits that basically seek to indemnify or settle evacuation costs to compensate for economic losses suffered by the insured.
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Members who subscribe to the Services are government agencies, public companies, and general companies, and it is highly reasonable to view that each had subscribed to the Services for health and safety protection for their employees. Also, the members actually believed that they would be provided with professional advice and evacuation services designed for the health and safety of their employees from International SOS and not from insurance benefits.
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This Supreme Court decision is significant in that it suggests certain judgment standards can be applied to distinguish insurance products with prepaid service contracts.
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Back to Main Page
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