'Insurance Fraud, Step Aside' Insurance Industry Strengthens Insurance Fraud Investigations

Saeng, Sonbohyeophoe Establishes Model Guidelines for Insurance Fraud Investigation
Strengthening the Role of Insurance Fraud Investigation Unit (SIU) and Establishing a Reporting Center
Includes Disciplinary Provisions for Insurance Workers Involved in Fraud

[Asia Economy Reporter Oh Hyung-gil] The insurance industry is systematizing the investigation of insurance fraud. This move comes in response to the rapid increase in insurance fraud cases each year, aiming to establish internal guidelines to be followed at each stage to ensure investigations are conducted smoothly and fairly.

According to the insurance industry on the 16th, the Life Insurance Association held a Regulatory Review Committee (Regulatory Committee) meeting on the 10th and passed a review agenda to newly establish a model code of conduct for insurance fraud investigation tasks. The General Insurance Association is also planning to establish a model code through its Regulatory Committee soon. The model code will be implemented starting from the 30th.

The core of the newly prepared model code is to secure the insurance companies' ability to prevent insurance fraud. Insurance companies are allowed to establish and operate dedicated departments for insurance fraud investigations to efficiently carry out fraud investigation tasks. Although most insurance companies autonomously operate Special Investigation Units (SIU), their roles will be further strengthened.

The SIU must have an independent function separate from the insurance claims compensation organization. It is also stipulated that they must establish and implement insurance fraud prevention strategies. They will also be tasked with pointing out factors that may trigger insurance fraud when developing new products or proposing measures to block fraudulent contracts at the underwriting stage.

Insurance companies are required to establish reasonable evaluation criteria for investigators or dedicated investigation departments to prevent conflicts of interest between insurance fraud investigators and policyholders or beneficiaries.

Additionally, to promote reporting of insurance fraud, insurance companies may establish reporting centers. The regulations also include provisions to pay rewards to informants recognized for contributing to the prevention or reduction of improper insurance payments through their reports. It also includes content prohibiting the disclosure or provision of informants' personal information to others without their consent.

Notably, the new model code includes a clause allowing disciplinary action against insurance industry workers involved in insurance fraud. Disciplinary measures or dismissal can be taken if concrete evidence acknowledging the individual's involvement in insurance fraud is secured or if a court issues a guilty verdict related to fraudulent acts.

This is expected to somewhat overcome the previous limitation where specific disciplinary procedures could only begin after a guilty verdict was handed down by the court.

The code also contains regulations regarding reporting to financial authorities, requests for investigations, and cooperation in investigations during the insurance fraud investigation process. If there is reasonable evidence to suspect insurance fraud or if cases involve two or more insurance companies, the Financial Supervisory Service must be reported at least by the time of the investigation request.

However, the model code represents industry self-regulation and does not have binding force or legal authority. A Life Insurance Association official explained, "Although the industry has autonomously conducted insurance fraud investigations so far, going forward, the operation of Special Investigation Units will expand, and the fraud investigation process can be carried out fairly."

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