"Enhanced Penalties for Insurance Industry Workers Involved in Fraud Conspiracy"... Amendment to Insurance Fraud Prevention Act Proposed

Rep. Hong Seong-guk Introduces Amendment to Insurance Fraud Prevention Act Including Enhanced Penalties

[Asia Economy Reporter Park Sun-mi] A bill has been proposed to impose heavier penalties on insurance industry workers who commit insurance fraud and to have the Financial Services Commission establish a dedicated organization and procedures to investigate insurance fraud.

On the 9th, Hong Seong-guk, a member of the National Assembly's Political Affairs Committee from the Democratic Party of Korea representing Sejong City Gap, announced that he has introduced the 'Special Act on the Prevention of Insurance Fraud Partial Amendment Bill' containing these provisions.

The amendment stipulates that if insurance industry workers such as insurance planners, medical institution workers, or automobile management business operators lead or conspire in insurance fraud, the existing penalty shall be increased by half. Additionally, the Financial Services Commission is required to establish a dedicated organization and procedures for preventing insurance fraud, and new regulations have been introduced allowing the Commission to request data provision from related administrative agencies and insurance companies, as well as to receive reports and conduct inspections for investigating insurance fraud.

According to data from the Financial Supervisory Service, the amount of insurance fraud detected increased from approximately 718.5 billion KRW in 2016 to about 880.9 billion KRW in 2019. The number of detected individuals also rose from 83,012 in 2016 to 92,538 in 2019.

Insurance fraud is mostly difficult to detect immediately because suspicion or investigation can only occur after insurance payments are made following an accident. Furthermore, despite regulations prescribing imprisonment of up to 10 years or fines of up to 50 million KRW upon detection, many cases result only in fines, which is pointed out as a factor that diminishes deterrence.

Assemblyman Hong Seong-guk emphasized, “As insurance fraud is increasing, it is becoming more organized and sophisticated,” adding, “Thorough measures and strict punishment by financial authorities are urgently needed to eradicate insurance fraud.”

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