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Photo = Yonhap news |
[Alpha Biz= Paul Lee] MG Insurance, a financially troubled insurer, is set to go through a liquidation process. Going forward, it will cease new sales, and existing contracts will be transferred to the five major insurance companies via a bridge insurer.
On May 14, the Financial Services Commission (FSC) held a regular meeting and decided to impose a partial suspension of MG Insurance’s operations while establishing a bridge insurer to facilitate the transfer of policies.
According to the FSC, the Financial Supervisory Service (FSS), the Korea Deposit Insurance Corporation (KDIC), and other related agencies have concluded that it is no longer realistic to expect MG Insurance to recover through self-reform efforts or potential mergers and acquisitions. As a result, liquidation via other means has become inevitable.
Considering the situation, it was deemed undesirable for MG Insurance to continue entering into new contracts, as it could risk the protection of policyholders, the stability of the financial market, and the integrity of the insurance industry. Therefore, the suspension of new business was deemed necessary for the orderly winding down of the company.
The suspension will affect the signing of new insurance contracts (except for re-enrollment and automatic renewals), and this suspension will last for six months, from May 15 to November 14.
Despite the suspension of new business, MG Insurance will continue to manage existing policies, including the receipt of premiums and payment of claims, as usual. Current policyholders will retain their rights under the existing contracts.
The FSC has also planned to transfer MG Insurance’s existing policies to five major non-life insurers: DB Insurance, Meritz Fire & Marine Insurance, Samsung Fire & Marine Insurance, KB Insurance, and Hyundai Marine & Fire Insurance. However, until the policy transfer process is complete, a bridge insurer will temporarily manage these contracts for about one year.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
