3) The respondents’ argument and the KFTC’s position
On the premise that a trade relationship means a legal relationship formed through the intention of parties concerned, the respondent argued that the relationship between each insurance company and the victims was merely a legal relationship established by law, in which the insurers provided insurance payouts when the direct claim for damages was exercised, not a trade relationship that was a legal relationship formed through the intention of the parties. In other words, they just assumed the damage compensation liability along with the insured, the respondents argued.
However, the KFTC viewed that a de facto trading relationship existed between the insurance companies and the victims because, regarding insurance payouts, both the
insurance; therefore, it was impossible to calculate the accurate amount of unpaid indirect damage insurance, and that it was also difficult to manually sort out such cases among 6,280,515 cases of property damage associated with car accidents which were handled by these eight non-life insurance companies over the past four years, it ruled that the amount of damage could be determined based on the average amount of indirect damage insurance already paid.
13 According to a survey on consumer awareness on automobile property damage, 87.4% of the people (5,246 people) replied that they did not know they were entitled to compensation for non-operation even though they did not rent a car while 88.9% (5,332 people) said that they were not aware of compensation for automobile depreciation [survey on non-payment of automobile insurance by the Korea Consumer Agency in December 2005].
policyholders including the insured and the victims could be subject to disadvantages, considering the nature of non-life insurance. Even though the victims exercised a direct claim for property damage insurance and the respondents provided the payouts through a relationship established by law, the problem of abusing an advantageous position in transaction may arise in the execution process. Therefore, in view of the purpose of the MRFTA, it is not reasonable to confine a trading relationship to exchange of goods or services through the intention of the parties concerned.
The respondents argued that there was no trade relationship between the victims and them, and even if there had been, the bargaining power and information imbalance alone would not have been enough to prove the existence of a superior position since the superior position means a position enabling a party to force its trading partner to purchase the products he or she does not want or accept disadvantageous terms of trade against his or her free will. According to the respondents’ argument, even when the victims did not accept their requests, they were not likely to face disadvantages such as refusal to pay damages or loss of trading accounts, and thus bargaining power and information imbalance would be insufficient for an advantageous position to be recognized.
However, on the grounds that (i) automobile insurance had the nature of a public insurance as well as a mandatory insurance; (ii) there existed imbalance of power and information between the parties; (iii) the owners of the cars damaged in accidents could not choose a nonlife insurance company to exercise their claim for damages; and (iv) in reality, when the insurers provided disadvantages by omitting performance of their obligations, most of these victims had to suffer them because they did not know of indirect insurance items such as compensation for non-use of rental cars, the KFTC concluded that the insurance companies were deemed to be in an advantageous position in transaction, and thus such argument was groundless.
Lastly, the respondents argued that non-payment of indirect damage insurance to the victims who did not file such claim was just omission of an action which was not compulsory, and it, thus, did not constitute an act of unreasonably providing disadvantages. If it had been to be recognized as an act of providing disadvantages, it should have been as compulsory as coercion to purchase, coercion to provide benefit, and coercion of sales target. In this regard, their conduct was not unreasonable as they did not coerce the victims to do something, the respondents argued.
However, the KFTC reasoned that the respondents’ non-payment of the compensation for car rentals and automobile depreciation, though small in amount as it was, clearly provided disadvantages to the individual victims who sought remedies for the damage to their cars without going through a settlement process. It was contrary to normal trade practices that the respondents let the victims not file a claim for such indirect damage insurance. On such ground, the KFTC recognized the unreasonableness of the respondents’ conduct.
4) Summary of the issues
An advantageous position in transaction could be easily recognized if an insurance company paid insurance payouts directly to the policyholder or the insured under the insurance clauses. However, a main issue in the present case was whether a trade relationship could be acknowledged if the owner of a car damaged by the insured files a direct insurance claim, granted by law, directly to the insurance company as a means of claiming compensation for the