Three life insurance firms are suspected of engaging in irregular accounting practices involving promotion expenses for their “bancassurance” business, industry sources said Sunday.
The three firms are Hanwha Life (formerly Korea Life), Tongyang Life and Mirae Asset Life, according to sources and the Financial Supervisory Service.
An FSS official said that the regulator recently issued sanctions, such as “reprimands” and “cautions,” against 12 executives and employees of the three insurance firms for failing to record extraordinary payments to banks on their financial statements.
“While the three firms offered commercial banks sales promotion gifts for insurance products, the extraordinary expenses were omitted from their accounts,” he said.
He said the practices were conducted during the insurers’ sales activities through commercial banks’ distribution channels, or the bancassurance business.
The FSS has revealed that Tongyang Life failed to record its expenses totaling 965 million won ($893,000) for the bancassurance sales promotion gifts, including golf balls and liquor products, from April 2011 to May 2012 on its financial statements.
Hanwha Life and Mirae Asset Life also excluded expenses worth 848 million won and 100 million won from their statements.
FSS issued a regulatory “reprimand” or “caution” to six employees or non-board member executives of Tongyang.
Three individuals of Hanwha and three of Mirae Asset were also subject to similar sanctions.
A source in the financial industry stressed that the insurance firms paid the extraordinary expenses “with corporate credit cards.”
He said that insurance firms, which operate their business based on policyholders’ money, should bolster the level of transparency.
By Chung Joo-won (
joowonc@heraldcorp.com)
