Forgery and False Claims... Why Can't Insurance Companies Catch Insurance Agent Fraud?

Hyundai, DB Insurance, and GA Affiliated Agents
Suspension Cancellation Sanctions
"Amend the Special Act on Insurance Fraud for Harsher Punishment"

[Asia Economy Reporter Oh Hyung-gil] Insurance agents who committed insurance fraud by forging insurance claim documents to receive insurance payouts have been caught and punished by financial authorities. There is a growing concern that cases of insiders with extensive knowledge of insurance committing fraud have sharply increased recently, prompting calls for harsher penalties against them.

According to the insurance industry on the 29th, the Financial Supervisory Service recently imposed sanctions including 180-day and 60-day business suspensions and registration cancellations on three exclusive agents from Hyundai Marine & Fire Insurance, DB Insurance, and the corporate insurance agency (GA) Global Financial Sales.

Agent A, affiliated with Hyundai Marine & Fire Insurance, was found to have fraudulently received 18.51 million KRW in insurance payouts through 234 instances from June 2016 to November of the following year by forging personal information on insurance claim documents of customers he recruited under his own or his children's names.

Although the policy did not cover disease-related claims, Agent A falsely fabricated insurance claim documents to appear as if treatment was received under injury coverage, fraudulently obtaining 7.67 million KRW over 104 instances.

Agent B from DB Insurance forged insurance claim documents by cutting and pasting his own name onto hospital receipts for medical expenses of policyholders. From January to September 2017, he collected 740,000 KRW in insurance payouts over seven instances. He also attempted but failed to receive 180,000 KRW for disease outpatient medical expenses.

Agent C, affiliated with Global Financial Sales, was found to have deliberately caused traffic accidents and deceived others into believing the accidents were accidental. From September 2014 to January 2017, Agent C staged traffic accidents and falsely claimed that individuals not present in the vehicle at the time were injured in the accidents, submitting claims to seven insurance companies and fraudulently receiving 25.5 million KRW.

There are concerns that moral hazard is becoming severe as the number of insurance-related workers involved in insurance fraud has recently surged.

Last year, among those caught for insurance fraud, 1,600 were insurance sales workers, 1,233 were hospital workers, and 1,071 were repair shop workers. The total number of detected insurance fraud workers was 3,904, a 7.3% increase from 3,636 the previous year. Additionally, 108 office workers employed by insurance-related companies were involved, marking a 56% increase compared to the same period last year.

The Life Insurance Association and the General Insurance Association have established model guidelines for insurance fraud investigations and included provisions allowing disciplinary actions against insurance industry workers involved in fraud, thereby strengthening penalties. However, the insurance industry is demanding further measures, including adding provisions to the Special Act on Insurance Fraud Prevention to impose aggravated penalties on insurance industry personnel involved in fraud.

An industry insider said, "The involvement of agents in insurance fraud undermines trust in insurance and must be thoroughly eradicated," adding, "Aggravated penalties and recovery of unjust gains should be reflected in the special law."

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