"Recruiting for Rear-End Collision Part-Time Job"... Financial Authorities Take Strong Action Against Insurance Fraud Conspiracy Advertisement (Comprehensive)

Fines for Non-Compliance Such as Deleting Online Advertisements
Surge in Fraud Detection... Proposed Amendments to the 'Special Act on Insurance Fraud Prevention'
Includes Harsher Penalties for Insurance Industry Insiders Involved

[Asia Economy Reporter Oh Hyung-gil] Recently, posts recruiting conspirators for insurance fraud by posing as high-paying part-time jobs, such as the so-called 'rear-end part-time job,' have spread through online social network services (SNS) like internet cafes and Facebook, emerging as a social issue. This has prompted corresponding measures.

On the 2nd, according to financial authorities and the insurance industry, the Financial Services Commission, Financial Supervisory Service, Life and Non-life Insurance Associations, and others have formed a joint task force to revise the Special Act on the Prevention of Insurance Fraud and have begun related work.

Although the Special Act on the Prevention of Insurance Fraud was enacted in 2016, it has been pointed out that it cannot keep up with the increasingly organized and sophisticated methods of insurance fraud, prompting the preparation of improvement measures.

Since the enactment of the special law, financial authorities have declared a 'war against insurance fraud' and have taken strong enforcement actions, but the scale of detected fraud has actually increased sharply every year. According to the Financial Supervisory Service, as of the end of last year, the number of people caught for insurance fraud was about 92,000, and the amount detected was 880.9 billion KRW. These figures represent increases of 10% and 22%, respectively, compared to before the special law was enacted. This means that on average, 254 people are caught for insurance fraud daily.

In particular, recently, as the economy has rapidly declined, organizations recruiting for insurance fraud targeting people facing economic difficulties have appeared. Additionally, videos encouraging and enticing insurance fraud by claiming methods to receive large insurance payouts have surged on platforms like YouTube.

As insurance fraud continues to spread, financial authorities have taken decisive action. The authorities plan to strengthen enforcement by adding provisions to the Special Act on Insurance Fraud prohibiting the mediation and advertisement of insurance fraud.

The core of the plan is to establish the authority to request submission of materials and necessary actions such as deletion from information and communication service providers regarding insurance fraud mediation and advertisement conducted via information and communication networks. If related materials are not submitted or necessary actions are not taken, a fine of up to 10 million KRW will be imposed.

Additional provisions will impose heavier penalties on insurance industry personnel involved in insurance fraud.

If recruiters, loss adjusters, hospital or clinic staff, or repair shop workers commit insurance fraud, they will face harsher penalties than general insurance fraud cases. It is also under discussion to mandate the immediate return of defrauded insurance money upon a confirmed fraud conviction and to allow insurers to cancel insurance contracts where fraud has occurred.

The political sphere has also taken steps to prevent insurance fraud. On the 30th of last month, Lee Joo-hwan, a member of the Future United Party, proposed a bill to the Financial Services Commission and Financial Supervisory Service to establish the authority to request data provision from public insurance-related institutions and to facilitate information exchange between public and private insurance.

Currently, public insurance-related institutions such as the National Health Insurance Service and the Korea Workers' Compensation and Welfare Service have the authority to request data provision and handle sensitive information under their respective laws, whereas the Financial Services Commission and Financial Supervisory Service lack legal grounds to request personal and sensitive information from related institutions.

The main point is to allow requests for necessary data provision to relevant administrative agencies, insurers, and other institutions or organizations designated by Presidential Decree when investigating insurance fraud activities.

A financial authority official stated, "Since contents such as heavier penalties for workers and recovery of unjust profits have already been introduced in other laws, we are working to reflect them in the Special Act on the Prevention of Insurance Fraud as well. We plan to submit the amendment bill to the National Assembly as soon as it is prepared."

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