From Claims to Insurance Fraud Prevention Law... Rising Expectations for Insurance Law Amendments

On the 27th, the National Assembly's Political Affairs Committee Bill Review Subcommittee Agenda
Insurance Fraud Exceeds 1 Trillion Won... Pending for 3 Years
Expectations Rise for Simplified Real Loss Claims Approval

The amendment to the Special Act on Insurance Fraud Prevention, which has been stalled for years despite no significant objections due to lower priority, is once again facing a critical test. As the scale of insurance fraud has exceeded 1 trillion won, a national consensus has also been formed. Since the bill to simplify claims for indemnity health insurance, which had long been blocked by sharp disagreements at the top priority, has now passed the National Assembly hurdle, there is optimism that this time the amendment will pass smoothly.

According to the industry on the 26th, the National Assembly's Political Affairs Committee plans to hold a bill subcommittee meeting on the 27th to discuss the amendment to the Special Act on Insurance Fraud Prevention. During the 21st National Assembly, 17 amendments to the Special Act on Insurance Fraud Prevention were proposed starting from June 2020, but none have moved beyond the pending status. Although the bill was occasionally selected as an agenda item for the Political Affairs Committee's bill review subcommittee, it never proceeded to review.

This time, the amendment is expected to pass. This is because the bill to simplify indemnity claims, which had been stalled for 14 years at the top priority, passed the subcommittee. The reason the insurance fraud prevention bill had not passed was not due to disagreements over the bill itself but because it was deprioritized, so expectations are rising this time.

Public support for preventing insurance fraud has also provided justification. According to the Financial Supervisory Service, the amount detected as insurance fraud last year was 1.0818 trillion won, surpassing 1 trillion won for the first time ever. The number of detected individuals also increased by 5,050 (5.2%) to 102,679 in one year. In the first half of last year, the amount recovered by insurers from fraudulent insurance claims was only 25.1%. Since the Special Act on Insurance Fraud Prevention was first enacted in March 2016 and has never been amended, there are many criticisms that its crime deterrent effect is insufficient. Although the Korean Medical Association, which strongly opposed the simplification of indemnity insurance claims, is again opposing measures such as public disclosure of names, arguing that they could inadvertently involve insurance fraud, it is not receiving much support.

Meanwhile, the current amendment includes ▲ aggravated punishment and public disclosure of names for insurance industry workers involved in insurance fraud ▲ return of unduly obtained insurance money and contract termination upon conviction of insurance fraud ▲ fines amounting to 2 to 3 times the amount gained from insurance fraud and imprisonment ▲ granting the Financial Services Commission the authority to request data from related agencies for insurance fraud investigations. An insurance industry official said, "Insurance fraud methods are becoming more sophisticated and rapidly changing through professional brokers," adding, "If insurance fraud increases, the coverage available to ordinary policyholders may eventually decrease, so prompt amendment of the law is necessary."

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