AIA Life Insurance Error Inflates Variable Insurance Performance: Industry Impact

erroneous statistics due to a reporting mistake by AIA Life Insurance

The recent remarkable performance of variable insurance in the life insurance industry was found to be based on erroneous statistics due to a reporting mistake by AIA Life Insurance. This incident highlights the importance of providing reliable data for both insurance companies and consumers.

On the 31st, the insurance industry was shocked by the revelation of errors in the first half of the year’s variable annuity insurance contract numbers. Earlier this month, the Korea Life Insurance Association (KLIA) announced that the total number of new variable annuity insurance contracts in the first half (January to June) was 54,020. However, suspicions arose when the figure for January skyrocketed to 13,756 contracts.

The average monthly number of variable annuity insurance contracts in the first half was 9,003, a significant increase compared to last year’s average of 5,047 contracts. This figure suggested that the life insurance industry had made significant strides in the variable insurance market during the first half of the year. Particularly notable was the January performance, which surged from 4,771 contracts in December to 13,756 contracts in January—a more than threefold increase in just one month.

However, this figure was later found to be erroneous. The initial premium for January (excluding single payments) was only 3.985 billion KRW, which was disproportionately low compared to the number of new contracts. In comparison, the initial premium for February, which had 6,061 contracts, was 4.616 billion KRW, highlighting the discrepancy.

This error originated from AIA Life Insurance, which incorrectly reported the figures to the KLIA. The mistake was due to misreporting the performance of disease and cancer insurance sold through telemarketing (TM) channels as variable savings. The error became apparent when the actual premium collected was found to be at the usual monthly level, despite the inflated contract numbers.

The published data has now been corrected, revising the number of new contracts in January to 5,094. AIA Life Insurance had overstated the actual number of contracts by 8,662. Consequently, the corrected number of new variable insurance contracts for the first half of the year is 45,358, with an average monthly contract number of 7,560.

AIA Life Insurance explained that this was a simple mistake by the responsible staff. A spokesperson for AIA Life Insurance stated, "We identified that there was an error in one of the formulas during the process of delivering the data. It was a mistake made by the person in charge, and the corrected data is now posted on the association’s notice."

The KLIA mentioned that such incidents occasionally happen. The KLIA’s website statistics section includes a notice stating, "Errors or discrepancies may occur in the process of life insurance companies preparing their reports and the association compiling the statistics, and these may be corrected without prior notice."

A KLIA representative said, "There was a minor error during the January performance compilation at AIA Life Insurance," and added, "We will thoroughly check to ensure more accurate information is provided in the future."

The incident of inflated variable insurance performance due to AIA Life Insurance's reporting error has had a significant impact on the industry. It underscores the importance of reliable data provision for both insurance companies and consumers. Moving forward, the insurance industry must strive to provide more accurate and trustworthy information.