[1] Standard for determining "the purpose of guaranteeing risks" as a conceptual element of insurance products under the Insurance Business Act

[2] Whether the service included in the "other benefits" among the conceptual elements of insurance products under the Insurance Business Act refers only to the service provided for the purpose of ensuring economic risk (affirmative)

[1] In light of the fact that the essence of the insurance is to achieve the purpose of eliminating or reducing economic instability that can arise from an accident, the "purpose of guaranteeing risks" as a conceptual element of the insurance product as stipulated by the Insurance Business Act shall not be easily acknowledged solely on the ground that the provision of economic value benefits is compensated for the damage. Such economic risk guarantee purpose shall be determined depending on the main objective of the target business in which the insurance business is at issue.

[2] Among the conceptual elements of an insurance product under the Insurance Business Act, the meaning that an insurance company intends to make it possible for an insurance company to diverse types of insurance benefits in accordance with various insurance demands, and it is not intended to regulate both the case of concluding a service contract with no pre-determined method at the time of the contract as an insurance product. Thus, the service included in the "other benefits" under the Insurance Business Act should be deemed as a service provided for the purpose of guaranteeing economic risks, i.e., the service provided for the purpose of guaranteeing risks, in principle, a monetary payment should be made, but it shall be deemed that the service is provided in the alternative sense of providing money for the convenience of insurance companies or customers.

[1] Article 2 subparag. 1 and 2, Article 4(1), and Article 20 subparag. 1 of the Insurance Business Act / [2] Article 2 subparag. 1 and 2, Article 4(1), and Article 20 subparag. 1 of the Insurance Business Act

Defendant 1 and one other

Prosecutor

Attorney Lee Im-soo et al.

Seoul Central District Court Decision 2013No541 Decided August 13, 2013

All appeals are dismissed.

The grounds of appeal are examined.

1. Article 4(1) of the Insurance Business Act provides that a person who intends to run an insurance business shall obtain permission from the Financial Services Commission, and Article 20 Subparag. 1 through Article 4(1) shall be punished. In addition, according to Article 2 of the Insurance Business Act, the term “insurance business” means the business of underwriting insurance, receiving premiums, paying insurance proceeds, etc. which arise in relation to the handling of insurance products (Article 2 of the Insurance Business Act). The term “insurance product” refers to a contract under which a person agrees to pay money and other benefits for the occurrence of a contingency for the purpose of guaranteeing risks and receives consideration therefor (Article 4(1)1).

As such, the concept of insurance is an institution that constitutes a joint preparation property by contributing insurance premiums to a certain rate in order to meet property demand in the event that a large number of people in dynamic economic risks occur, namely, in order to reduce or eliminate the apprehension of economic life by paying insurance proceeds (see Supreme Court Decision 87Do2172, Jan. 31, 1989, etc.).

In addition, the Insurance Business Act imposes criminal punishment on a person who runs an insurance business by meeting physical and personal requirements prescribed in the Act and obtaining permission from the Financial Services Commission for each type of insurance business. In light of the provisions and purport of the Act on the Regulation of Insurance Business, whether a person falls under an insurance business that is subject to a license shall be determined by considering the substance or economic nature of the insurance business, regardless of the name of the business or the form of legal composition (see, e.g., Supreme Court Decisions 87Do2172, Jan. 31, 1989; 201Do1358, Apr. 26, 2013).

2. According to the reasoning of the lower judgment and the evidence admitted by the lower court, Defendant 2 (hereinafter “Defendant Company”) mainly provides medical consultation and medical institution brokerage services (hereinafter “medical consultation services”) and residents in serious medical conditions and repatriation services of home country (hereinafter “transfer and repatriation services”) to employees dispatched overseas by government agencies, public institutions, general companies, etc. In the event that the Defendant Company enters into a contract on medical consultation services with a SP method (hereinafter “SP method”), it would provide a agreed service upon prior payment of all of the costs from the subscribers, and would receive expenses in advance from the subscribers for the Acces MP’s service and receive expenses for the transfer and repatriation of the services from the members, and later the expenses for repatriation and repatriation of the services are paid to the members, and it would be necessary to directly determine whether there is a need for treatment or repatriation of the services from a medical institution in another region. Accordingly, it would be necessary to directly determine whether there is a difference in the payment of medical expenses from the Defendant Company.

3. We examine the above facts in light of the legal principles as seen earlier.

A. In light of the fact that the inherent nature of the insurance is to achieve the purpose of eliminating or reducing economic anxietys that may arise from an accident, the “purpose of guaranteeing risks” as a conceptual element of insurance products as stipulated by the Insurance Business Act shall not be easily acknowledged solely on the ground that the provision of economic-value benefits is compensated for losses. Determination shall be made based on whether the purpose of guaranteeing economic risks is the main objective of the target business in which the insurance business is at issue.

In addition, among the conceptual elements of insurance products prescribed by the Insurance Business Act, the term “other benefits” means that an insurer intends to make it possible for an insurer to form various insurance benefits in accordance with various insurance demands, and it is not intended to regulate both the case of concluding a service contract with no pre-determined method at the time of the contract as insurance products. As such, the service included in the “other benefits” under the Insurance Business Act is, in principle, provided for the purpose of guaranteeing economic risks, i.e., the provision of monetary benefits as compensation for risks, but the provision of alternative services within the meaning of money for the convenience of insurance companies or customers.

Therefore, the issue of whether the emergency medical assistance service provided by the Defendant Company by the SMP method (hereinafter “instant SP service”) constitutes insurance products ought to be determined depending on whether the service provided was paid as a substitute for money for guaranteeing risk, or whether the service was provided as a principal purpose.

B. Although the instant SP services may be deemed to have elements of friendly and economic compensation in that they provide economic value-oriented transfer or repatriation services due to the occurrence of a sudden occurrence of a serious medical condition, it is merely an incidental effect arising from the provision of the services, and it cannot be deemed that the instant SP services are mainly aimed at ensuring economic risk solely on the effect of cost compensation.

Rather, the instant SP services do not merely provide for the expenses of transfer to a hospital or repatriation to a home country, but rather provide comprehensive and specialized services, including medical judgment, determination of available means of transport, and practical transfer and repatriation services, and determination of whether to provide services and the method and timing of provision. As such, the Defendant company is the service provider, the service provider. As such, it is different from the insurance benefits for the purpose of compensating for economic losses that the insured, etc. bear by simply paying or settling transfer costs.

In addition, it is reasonable to view that the participants of the instant SP services were government agencies, public enterprises, and ordinary enterprises, and they were subscribed to the instant SP services to protect the health and safety of their employees. In fact, it is reasonable to view that the subscribers were provided with professional counseling and transfer services for the health and safety of their employees from the Defendant Company.

Therefore, the main purpose of the defendant company's transfer and repatriation service is not compensation for monetary loss, but if a member staying in a foreign country is in a "serious medical condition", it should be deemed that the defendant company itself provides the service of transfer to a hospital and repatriation to its home country.

C. As such, it is reasonable to view that the instant SP service is not an economic risk guarantee, but its main purpose is the provision of the service itself. Thus, the instant SP service cannot be deemed as an insurance product stipulated in the Insurance Business Act.

Ultimately, the lower court was justifiable to have determined the Defendants not guilty on the grounds that it is difficult to view the SP service contract as an insurance product under the Insurance Business Act. In so doing, it did not err by misapprehending the legal doctrine on the Insurance Business Act, contrary to what is alleged in the grounds of appeal.

4. Therefore, all appeals are dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Chang-suk (Presiding Justice)