Delivery Company Owner Colludes with Part-Timer to Stage Minor Accident, Embezzling 3 Billion Won in Insurance Money

Authorities Urge Caution Over Increasingly Intelligent and Organized Insurance Fraud Methods

[Asia Economy Reporter Oh Hyung-gil] Mr. A, who operated a motorcycle delivery business, posted an advertisement on social networking services (SNS) recruiting delivery workers with the message "Contact me if you need money." He enticed the recruited part-timers by saying, "You can easily make money by intentionally causing traffic accidents,"

causing 150 intentional contact accidents and sharing 3 billion KRW in insurance money. The delivery insurance fraud organization caught by authorities numbered about 200 people.

Mr. B traveled nationwide with his family, eating at restaurants and claiming to have food poisoning requiring treatment, or asserting that foreign substances in food damaged his teeth, threatening restaurants and food manufacturers to demand compensation for medical expenses and mental damages, fraudulently obtaining 67 million KRW in insurance money.

Recently, insurance fraud methods have become more sophisticated and organized, such as recruiting accomplices via SNS or brokers filing false insurance claims, requiring consumers to be cautious.

According to major insurance fraud cases uncovered last year through cooperation with investigative agencies, released by the Financial Supervisory Service on the 14th, there is a trend of increasing sophistication and organization of insurance fraud across various insurance types.

As delivery agencies increase, reports and detections of organized insurance fraud involving teenage to twenties delivery workers are rising nationwide. Due to their lack of social experience and low awareness of crime, they easily participate in insurance fraud, posing a social problem.

In the case of indemnity medical insurance, treatments not covered, such as obesity drugs, were disguised as treatable illnesses like colds eligible for indemnity insurance, with medical receipts issued to claim insurance money. Brokers are involved in such fraudulent claims, causing insurance money leakage and premium increases.

Authorities also caught a policyholder and resident who, after a large water pipe leak damage occurred to neighboring units in multi-family housing without liability insurance, manipulated accident dates to claim insurance money as if the leak happened after newly subscribing to insurance or changed units to claim, receiving 90 million KRW in insurance money.

Accordingly, the amount of insurance fraud detected in non-life insurance in the first half of last year increased by 3.0% from the previous year, reaching 373.2 billion KRW.

A financial authority official said, "Be cautious of brokers who recommend cosmetic procedures under the pretext of covering medical expenses with indemnity insurance," and added, "Falsifying accident details to claim insurance money constitutes insurance fraud and should be refused."

The Financial Supervisory Service plans to continuously strengthen insurance fraud investigations and detections through market monitoring and cooperation with related agencies, and to persistently promote preventive activities to stop insurance fraud.