"Annual Insurance Fraud Losses Reach 1 Trillion Won, Related Laws Must Be Strengthened"

[Asia Economy Reporter Changhwan Lee] The scale of insurance fraud in South Korea is continuously growing, prompting calls for strengthening related laws and expanding the government's role in response.

According to the Insurance Research Institute's report titled "Characteristics and Countermeasures of Insurance Fraud" released on the 19th, the amount of detected insurance fraud in the country has been steadily increasing, with a notable rise in high-value insurance fraud cases.

Last year, the amount detected in insurance fraud reached 943.4 billion KRW, marking a 5% increase (44.8 billion KRW) compared to the previous year. Among these, high-value insurance fraud cases are on the rise. Cases involving fraud amounts exceeding 10 million KRW increased from 664.6 billion KRW (15,213 people) in 2020 to 698.8 billion KRW (17,452 people) in 2021, an increase of 34.2 billion KRW (2,239 people).

Insurance fraud is characterized not only by its growing scale but also by increasing sophistication.

The report analyzed that cases of insurance fraud committed by exploiting specialized knowledge or positions in specific fields, as well as organized insurance fraud by broker organizations and office-managed hospitals, are on the rise.

The number of hospital staff caught increased from 944 in 2020 to 1,457 in 2021, a rise of 513 people (54.3%), and the number of detected auto repair shop employees also grew from 1,138 in 2020 to 1,699 in 2021, an increase of 561 people (49.3%).

Cases where broker organizations disguised as legitimate marketing firms collude with hospitals to commit insurance fraud, as well as false hospitalization cases in office-managed hospitals, are also increasing.

The report argues that to effectively respond to insurance fraud, it is necessary to develop countermeasures that consider the characteristics of insurance fraud. It points out the need to enhance the connectivity of responses across legal domains, expand the roles of relevant industry authorities, and establish proactive and effective measures against broker organizations and office-managed hospitals.

Additionally, it emphasized the need to expand the contents and reorganize the framework of the Special Act on the Prevention of Insurance Fraud.

Hwang Hyun-ah, a research fellow at the Insurance Research Institute, stressed, "Although the Special Act on the Prevention of Insurance Fraud was enacted to effectively respond to insurance fraud, it only regulates the minimum necessary matters, limiting its role as a foundational law for comprehensive and effective responses."

She added, "To achieve a comprehensive, proactive, and effective response to insurance fraud, it is necessary to reorganize the framework and expand the contents of the Special Act. However, care must be taken to ensure that these changes do not restrict consumers' legitimate rights."

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