"Offering a 1 Billion Won Bounty" Insurance Company Directly Catches Scammers

[Asia Economy Reporter Changhwan Lee] "Report insurance fraud and receive a maximum reward of 1 billion KRW."

Domestic insurance companies have actively started responding to large-scale insurance fraud. With insurance fraud increasing every year and the methods becoming more organized and large-scale, they can no longer stand by and have taken direct action to catch the fraudsters themselves.

According to the insurance industry on the 1st, Hyundai Marine & Fire Insurance will conduct a ‘Long-term Insurance Fraud Reporting Campaign’ targeting its affiliated agents until the 31st of next month. They plan to provide rewards up to 1 billion KRW, scaled according to the size of the fraud detected. This is the largest reward ever offered in the insurance industry related to insurance fraud reporting.

A Hyundai Marine & Fire Insurance official explained, "We will also implement preferential insurance contract review policies for agents who provide valuable information, considering the scale of the fraud and their contribution," adding, "During the campaign period, additional rewards of up to 10 million KRW are possible, so rewards exceeding 1 billion KRW can be given."

Other insurance companies have also joined the war against insurance fraud. Major domestic non-life insurers such as Samsung Fire & Marine Insurance, DB Insurance, KB Insurance, and Meritz Fire & Marine Insurance have been actively identifying ophthalmology clinics conducting illegal cataract surgeries since the second half of last year and reporting them to health authorities.

Some clinics collude with brokers to perform surgeries illegally and claim indemnity insurance. Last month, KB Insurance reported 55 ophthalmology clinics that posted exaggerated or false advertisements to attract cataract surgery patients to health authorities on charges of illegal medical advertising and illegal patient solicitation.

In the case of cataract surgery, indemnity insurance payments made by major non-life insurers reportedly surged from around 3 billion KRW per day last year to over 10 billion KRW this year. As the damage snowballs, even the survival of indemnity insurance is being questioned.

Domestic insurance fraud is on the rise. According to the Financial Supervisory Service, the amount detected for insurance fraud in Korea was 898.6 billion KRW in 2020, a 23% increase from 730.2 billion KRW in 2017. During the same period, the number of people caught for insurance fraud rose by 18.3%, from 83,535 to 98,826.

Although the final tally has not yet been completed, the industry believes insurance fraud increased last year as well. The largest portion of insurance fraud is non-life insurance fraud, accounting for 91.1% as of 2020. Most of these are indemnity insurance or automobile insurance fraud cases.

As insurance fraud increases, the damage also grows. Last year, the deficit in domestic indemnity insurance reached about 3.5 trillion KRW, the largest ever. When the indemnity insurance deficit grows, premiums rise significantly, and honest policyholders may suffer.

An official from a domestic insurance company said, "In recent years, insurance fraud has become larger and more centered around large broker organizations, increasing the scale of fraud," adding, "This year, the indemnity insurance deficit is growing further, so insurance companies are actively working to prevent damage."

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