Credit card firms scrap insurance after Asiana crash

Credit card companies have decided to cease offering insurance payments for death as a result of an aviation accident, according to the Financial Supervisory Service on Tuesday.

Regulatory officials at the FSS said major issuers would scrap the insurance, which has been sold in coordination with insurance firms, from September. Among the firms are Shinhan Card, Hyundai Card, Samsung Card, KB Kookmin Card, Lotte Card and Hana SK Card.

About 10 million consumers currently signed up for credit cards with flight-related insurance will lose the benefit that insures for up to 500 million won ($440,000). While leaving the flight injury insurance status quo, the credit card firms will halt the flight life insurance.

The insurance products were created through collaboration between credit card firms and insurance companies, and enjoyed high popularity among air travelers.

The move came after the companies’ partner insurers announced they were scrapping insurance relating to death through air travel, citing changes in articles of contract.

“But the recent crash landing of Asiana could have significantly accelerated the condition change, frightening the insurance companies,” said an official of a credit card firm on condition of anonymity.

Asiana Airlines flight 214 crash-landed at San Francisco International Airport on July 6, killing two Chinese teenagers and injuring some 180 passengers.

The insurance firms had wanted to terminate all flight-related insurance ― for both injuries and death ― but the state financial regulator intervened, urging the companies to retain some insurance.

For instance, Shinhan’s Trabiz Card will halt insurance covering death on Aug. 31, while maintaining other flight-related insurance for injury or lost luggage. The life insurance had been worth up to 500 million won, while the other products offer payouts of up to 5 million won.

By Chung Joo-won (joowonc@heraldcorp.com)