[2021 National Audit] Last Year Insurance Fraud Amounted to 898.6 Billion Won... "Effective Countermeasures Needed"

[Asia Economy Reporter Park Sun-mi] As the amount of insurance fraud detected has increased every year, reaching 898.6 billion KRW last year, financial authorities need to establish effective measures, experts pointed out.

On the 21st, Kim Han-jung, a member of the National Assembly's Political Affairs Committee and Special Committee on Budget and Accounts from the Democratic Party of Korea, urged the supervisory authorities to prepare effective countermeasures, stating that the increasing insurance fraud each year is a serious crime that not only affects insurance companies but also undermines the finances of the National Health Insurance Service.

According to data from the Financial Supervisory Service, the amount of insurance fraud detected in 2020 totaled 898.6 billion KRW, with 77.1 billion KRW related to life insurance and 821.5 billion KRW related to non-life insurance. Meanwhile, a joint investigation conducted last year by the Financial Supervisory Service and the National Health Insurance Service into hospitals suspected of insurance fraud uncovered fraud amounting to 23.3 billion KRW across 25 hospitals.

Assemblyman Kim Han-jung explained, “The scale of insurance fraud detected through joint investigations by the Financial Supervisory Service and the National Health Insurance Service (23.3 billion KRW) differs significantly from the total detected insurance fraud amount (898.6 billion KRW) and the estimated insurance fraud scale (a total of 7.4 trillion KRW) jointly estimated by Seoul National University and the Korea Insurance Research Institute.” He added, “This is because, due to the lack of legal grounds, information sharing between related agencies such as the Financial Supervisory Service and the National Health Insurance Service did not occur, making it impossible to investigate the entire scope, and only hospitals suspected of insurance fraud reported to investigative agencies could be investigated.”

A joint study by Seoul National University and the Korea Insurance Research Institute estimated that the amount of insurance fraud claimed to insurance companies is 6.1512 trillion KRW annually, which is about 4.3% of paid insurance benefits (143 trillion KRW). The amount excessively claimed to the National Health Insurance due to insurance company fraud is estimated to be up to 1.2 trillion KRW, about 1.5% of medical benefits (77.9 trillion KRW).

Assemblyman Kim stated, “Many insurance policyholders are unknowingly involved in insurance fraud, misled by some medical institutions and brokers.” He urged, “Supervisory authorities should more accurately grasp the actual situation of insurance fraud and establish effective measures by strengthening information sharing among related agencies through amendments to the Special Act on the Prevention of Insurance Fraud.”