Will It Reduce 1 Trillion Won Leakage... Insurance Fraud Prevention Act Passes National Assembly Threshold

Passed the National Assembly's Political Affairs Committee Bill Subcommittee
Expectations Rise for First Revision Since 2016
Reducing Insurance Fraud by Just 10% Could Save 600 Billion Won in Premiums

The "Special Act on the Prevention of Insurance Fraud" amendment, which includes provisions for returning improperly obtained insurance money and disclosing related lists, has passed the National Assembly's Political Affairs Committee's Bill Review Subcommittee. Attention is focused on whether it can prevent the leakage of insurance funds, which has already exceeded 1 trillion won.

On the afternoon of the 4th, the Political Affairs Committee held the first Bill Review Subcommittee meeting at the National Assembly Main Building in Yeouido, Seoul, and processed the amendment to the Special Act on the Prevention of Insurance Fraud. This marks the first amendment since the related law was enacted in 2016. The amendment includes provisions to publicly disclose the names of insurance planners and other insurance workers, medical institutions, and automobile repair shops punished for insurance fraud, and to apply aggravated penalties to them. It also requires the return of improperly obtained insurance money once a conviction for insurance fraud is confirmed. Additionally, it includes legal grounds for the Financial Services Commission and the Financial Supervisory Service to request data from related agencies for insurance fraud investigations.

Insurance fraud has already reached an unprecedented scale. According to the Financial Supervisory Service, the amount detected for insurance fraud last year reached a record high of 1.0818 trillion won. Last year was the first time the detected amount exceeded 1 trillion won. The number of people detected also increased by 5,050 (5.2%) to 102,679 compared to the previous year.

With the passage of this amendment, the insurance industry expects the scale of insurance fraud to decrease. According to an analysis by the office of Yoon Chang-hyun, a member of the National Assembly's Political Affairs Committee from the People Power Party, based on data submitted by the Financial Supervisory Service and others regarding last year's insurance payouts and insurance fraud rates of non-life insurers, it is estimated that about 600 billion won in insurance premiums will be reduced if the Special Act is amended. This assumes a 10% decrease in detected insurance fraud amounts. This also means that general policyholders have been paying an additional 600 billion won in premiums to cover the leakage of insurance funds caused by insurance fraud until now.

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