As Delivery Motorcycle Accidents Surge... Insurance Fraud Also Jumps

Rapid Growth of Delivery Market
Increase in Two-Wheeled Vehicle Accidents

On the 7th, when the temperature in Seoul dropped to minus 15 degrees Celsius and a cold wave warning was issued, a motorcycle delivery worker set out for deliveries during lunchtime on Seosomun-ro, Jung-gu, Seoul. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Oh Hyung-gil] Jeon Min-woo (45, pseudonym), who operates a delivery agency, deceived delivery workers into enrolling their delivery motorcycles in insurance by claiming they were for commuting purposes. He registered a total of 19 motorcycles under household insurance, which has lower premiums, saving 44 million KRW in insurance fees from 2018 to December last year. He also instructed delivery workers to falsely report traffic accidents that occurred during deliveries as commuting accidents, collecting 11 million KRW in insurance payouts. The Ilsan Western Police Station of the Gyeonggi Northern Provincial Police Agency booked Jeon and six delivery workers and company employees without detention last December on charges of fraud and violation of the Special Act on the Prevention of Insurance Fraud.

As the platform-based delivery market rapidly grows, accidents involving two-wheeled vehicles such as motorcycles are increasing. There is a rising concern that the high accident rate caused by risky "acrobat driving" to meet delivery times is being exploited for insurance fraud, making urgent countermeasures necessary.

According to the insurance industry on the 5th, the number of two-wheeled vehicle accidents increased by a staggering 45.9% over the past five years, from 12,654 cases in 2015 to 18,467 cases in 2019. More than 400 deaths occur annually due to two-wheeled vehicle accidents.

As two-wheeled vehicle accidents increase, insurance fraud is also on the rise. Hyundai Marine & Fire Insurance's analysis of two-wheeled vehicle insurance fraud revealed that the scale of detected insurance fraud grew by 5.4%, from 83.6 billion KRW in 2018 to 83.6 billion KRW in 2019.

The most common type of fraud was drunk or unlicensed driving (26.6%). This was followed by driver substitution (19.1%) and accident content manipulation (15.6%). Recently, there has also been an increase in cases where insurance is purchased after an accident occurs or additional victims are added to claim insurance money.

This is explained by the fact that platform-based two-wheeled vehicle insurance fraud features smooth information exchange among platform workers, collusion with maintenance shop employees, and the fact that most delivery workers are in their teens and twenties with high social media (SNS) proficiency, recruiting accomplices through SNS-based methods.

Although the insurance payout amounts are small, two-wheeled vehicle fraud methods are spreading into linked and expanded fraud schemes applied to automobile insurance fraud. To prevent this, it is pointed out that data construction reflecting SNS characteristics is necessary when developing insurance fraud detection rules.

Considering these characteristics, cases of detecting insurance fraud are also increasing. Last year, DB Insurance detected 350 insurance fraudsters by analyzing accident frequency, passenger relationships, and accident videos using the Integrated Fraud Detection System (IFDS) after a surge in delivery motorcycle accidents in Daegu. They also won the grand prize at the Financial Supervisory Service’s Insurance Fraud Prevention Best Practice Competition.

Kim Tae-ho, a research fellow at Hyundai Marine & Fire Insurance’s Traffic, Climate, and Environment Research Institute, suggested, "It is urgent to develop detection rules for suspected fraudsters that reflect the characteristics of personal and vehicle claims and the patterns of fraud spread to prevent two-wheeled vehicle insurance fraud," adding, "There is a need to establish an integrated management system for insurance fraud suspects."

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