"Insurance Fraud Increases Further" Insurance Fraud Expected to Surpass 1 Trillion Won for the First Time This Year

[Asia Economy Reporter Changhwan Lee] The amount of insurance fraud detected this year is expected to exceed 1 trillion won for the first time. As the scale of insurance fraud grows every year, there are calls to strengthen related laws to prevent it.

According to data submitted by the Financial Supervisory Service to the office of Kang Ming-guk, a member of the National Assembly's Political Affairs Committee from the People Power Party, the total amount detected as insurance fraud from 2017 to August this year reached 4.9405 trillion won.

The annual amounts detected for insurance fraud have steadily increased from 730.2 billion won in 2017 to 798.2 billion won in 2018, 880.9 billion won in 2019, 898.6 billion won in 2020, and 943.4 billion won in 2021.

This year, a total of 689.2 billion won was detected by August, and if the current trend (an average of 86.15 billion won per month) continues until the end of the year, the annual detected amount is expected to surpass 1 trillion won for the first time in history.

Over the past five years, 516,044 people have been caught for insurance fraud. The number of people detected annually was 83,535 in 2017, 79,179 in 2018, 92,538 in 2019, and 98,826 in 2020, increasing every year, but slightly decreased to 97,629 in 2021 during the COVID-19 pandemic.

By sector, the number of detections in non-life insurance was 470,758, far exceeding life insurance at 45,286. The amount of insurance fraud was also larger in non-life insurance at 4.5566 trillion won compared to life insurance at 384 billion won.

This is interpreted as being due to non-life insurance products such as automobile insurance and actual medical expense insurance having many opportunities to fraudulently claim insurance money by intentionally causing accidents or issuing fake medical certificates.

As of last year, the types of insurance fraud were 60.6% manipulation of accident details, 16.7% intentional accidents, and 15.0% false accidents. Manipulation of accident details mainly includes exaggerated claims through forged medical certificates, manipulation of automobile accident details, and drunk or unlicensed driving.

Source: Financial Supervisory Service

From 2017 to August this year, among non-life insurers, Samsung Fire & Marine Insurance had the highest number of detected insurance fraud cases at 119,595, followed by DB Insurance with 105,472 and Hyundai Marine & Fire Insurance with 101,707. Among life insurers, Samsung Life Insurance had the most at 23,694, followed by Kyobo Life Insurance with 3,616 and Tongyang Life Insurance with 3,098.

Regarding the amount detected for insurance fraud, among non-life insurers, Samsung Fire & Marine Insurance recorded 1.2242 trillion won, Hyundai Marine & Fire Insurance 1.0464 trillion won, and DB Insurance 1.0329 trillion won. For life insurers, Samsung Life Insurance had 74.8 billion won, Kyobo Life Insurance 51.1 billion won, and LINA Life Insurance 46.2 billion won.

While the amount detected for insurance fraud is increasing, the recovery performance has not kept pace. The insurance fraud recovery rate, which is the ratio of the amount recovered by insurance companies from the 'investigation-detected amount' identified by investigative agencies after insurance payments, averaged 15.2% for non-life insurers and 17.1% for life insurers from 2017 to 2021.

The Financial Supervisory Service explained that insurance money recovery takes a long time until the final judicial action is completed, and during this period, many recipients spend the paid insurance money, resulting in a low recovery rate.

There are also calls in the National Assembly to strengthen the Special Act on Insurance Fraud Prevention to expand the Financial Supervisory Authority's investigative powers and increase penalties to reduce insurance fraud. The Special Act on Insurance Fraud Prevention was enacted in 2016 by both ruling and opposition parties as insurance fraud became increasingly serious. Insurance companies have continuously demanded strengthening related laws.

Assemblyman Kang said, "The financial authorities should organize an insurance fraud response infrastructure through cooperation with related organizations such as the National Health Insurance Service to improve the efficiency of insurance fraud investigations. Additionally, investigations should be strengthened in vulnerable areas where insurance payments are rapidly increasing to actively respond to new types of insurance fraud."

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