Internal Control 'Gaps' in Insurance Companies... Consecutive Financial Incidents Involving 설계사 and Employees (Comprehensive)

Forgery of Documents to Fraudulently Obtain Insurance Premiums

Loans Also Taken Using Copies of Customer IDs

Increase in Fines and Lawsuits Filed

[Asia Economy Reporter Oh Hyung-gil] Insurance agent A, affiliated with Hanwha General Insurance agency, forged documents from November 2016 to June last year to embezzle insurance premiums and refund payments from customers and the company. The estimated loss amount is about 360 million KRW. Hanwha General Insurance has filed a criminal complaint against A for forgery of private documents and fraud and plans to seek compensation for the loss amount.

According to the insurance industry on the 7th, financial accidents caused by insurance agents and employees affiliated with insurance companies have been repeatedly detected. There are calls for a thorough inspection of whether internal controls within insurance companies are properly implemented.

Mirae Asset Life Insurance recently disclosed that agent B, affiliated with the company, was found to have deceived contract holders from July 2015 to September 2017 by promising high-interest returns if they provided funds for fund investments, thereby receiving investment money. As a result, the related agent was dismissed at the end of last year, and the manager was reprimanded.

Additionally, Mirae Asset Life Insurance confirmed that C, the representative of an insurance agency (GA) partnered for product sales, did not actually conduct business in 2017 but forged contracts to embezzle commissions. Some of the approximately 370 million KRW loss has been recovered, and C has been reported to the police with lawsuits being prepared. Internally, controls over GA management and supervision will be strengthened.

NongHyup Life Insurance also detected that D, a local NongHyup employee, used copies of customers' ID cards to obtain insurance policy loans and mid-term loans from December 2013 to February 2016.

The embezzlement by the local NongHyup employee was reported to the NongHyup Central Association, and a lawsuit for damages based on the business consignment contract and employer liability for illegal acts was filed against the local NongHyup, resulting in a partial victory.

The-K Non-Life Insurance confirmed at the end of last year that E, the head of the asset management team, executed loans for real estate development projects in 2017 and 2018 without including key collateral preservation measures or credit enhancements. The estimated loss amount was 2.219 billion KRW. The-K plans to file criminal charges against E for breach of trust, bribery, and forgery of private documents and will also initiate civil lawsuits.

Some insurance companies have also been fined by financial authorities.

DB Insurance recently received a fine of 8 million KRW and a penalty of 84 million KRW after the Financial Supervisory Service found violations related to prohibited acts in insurance contract solicitation and improper consent procedures for the use of personal credit information during a partial inspection in 2018. Heungkuk Fire & Marine Insurance was also fined 35 million KRW last month by the Financial Services Commission for unfair insurance contract acceptance practices.

Agents who commit financial accidents face registration cancellations by financial authorities, with about 100 cases of cancellation in the past five years. These include 62 cases of insurance premium misappropriation, 15 cases of unjust insurance claim receipt, and 8 cases of loan misappropriation.

Voices calling for strengthened internal controls are emerging within the insurance industry. An industry insider said, "There is a need to further strengthen internal monitoring systems to minimize financial accidents," but also lamented, "However, it is true that it is difficult to prevent illegal acts individually committed by some agents or employees."

This content was produced with the assistance of AI translation services.