[Shocking Insurance Fraud①] Record High Violent Crimes... The Brutal History of Insurance Fraud

Valuable Insurance-Related Crimes Continue, Including Valley Murder Case and Cambodia Pregnant Wife Death Case

Behind powerful murder cases that have shaken social norms, such as the Lee Eun-hae valley murder and the death of a pregnant wife in Cambodia, lies insurance fraud. The scale of insurance fraud is growing every year, and recently, the methods have become bolder and more aggressive. Despite the National Assembly enacting a special law to prevent insurance fraud, its effectiveness remains insufficient. We aim to consider how to reduce and prevent insurance fraud. [Editor's note]

"The valley murder case was already an issue within the company before it became widely known. The insurance subscription period was very short, and the fact that there was only one beneficiary raised suspicions of a typical insurance fraud method."

An insurance company official, who had conflicts with Lee Eun-hae, the suspect accused of murdering her husband for insurance money in the valley murder case, said this. This insurance company was the first to detect Lee’s insurance fraud suspicions.

The company official explained, "Not only the valley murder but also the number of violent cases suspected of insurance fraud is steadily increasing, so we are expanding our specialized investigation team to respond professionally."

Insurance companies say that the scale of insurance fraud is growing every year, and the methods are becoming bolder and more sophisticated, making it increasingly difficult to respond.

According to the Financial Supervisory Service on the 27th, the amount of domestic insurance fraud detected last year was 943.4 billion won, the highest ever. The scale of domestic insurance fraud, which first exceeded 700 billion won in 2016 at 718.5 billion won, surged by 31.3% in just five years.

What is more concerning is the rapid increase in violent crimes such as murder and arson committed for insurance money.

Last year, the amount detected for violent insurance fraud such as murder and injury was 5.2 billion won, and the number of people caught was 97, increasing by 40.3% and 34.7% respectively compared to the previous year. The number of people caught for property damage and arson also rose to 284, an 88.1% increase from the previous year.

Cases that shocked society, such as the death of a pregnant wife in Cambodia, the nicotine concentrate wife murder case, and the Geumo-do ferry terminal case, are suspected to have been committed with the intent of claiming large life insurance payouts.

The death of the pregnant wife in Cambodia occurred in August 2014 when a van driven by Mr. Lee collided with a cargo truck parked on the shoulder of the Gyeongbu Expressway, killing his Cambodian wife in the passenger seat along with the baby she was carrying.

At that time, there were 25 insurance policies with the wife as the insured, with total insurance payouts reaching 10 billion won, raising suspicions of intentional murder. However, the Supreme Court ruled not guilty in 2017 due to lack of motive and evidence for insurance fraud.

Mr. Lee is still involved in lawsuits with several insurance companies over insurance payouts. Even if the criminal case results in acquittal, civil cases such as insurance payouts may have different rulings.

Suspect Lee Eun-hae (31) in the 'Valley Murder' case is being escorted to the Incheon District Prosecutors' Office in Michuhol-gu, Incheon City, on the afternoon of the 16th. [Image source=Yonhap News]

The nicotine concentrate wife murder case involved a husband who, during a honeymoon trip to Osaka, Japan, in April 2017, injected nicotine concentrate into his wife to kill her and attempted to claim 150 million won in death insurance benefits but was caught.

The Geumo-do ferry terminal case occurred in 2018 in Yeosu, Jeollanam-do, where the husband left the car in neutral gear, and the car plunged into the sea, resulting in the wife’s death.

Just before the accident, an insurance policy worth 1.7 billion won was taken out in the wife’s name, and the beneficiary was changed from the wife to the husband, raising suspicions of insurance fraud, but this case also ended with a final not guilty verdict in 2020.

An official from the Life Insurance Association said, "Life insurance often becomes a motive for violent crimes because it involves receiving large sums upon death," adding, "Major insurance companies all have internal investigation teams dedicated to detecting such crimes."

Recently, insurance fraud has also become more corporate and organized. The excessive cataract treatment controversy in the non-life insurance industry, which has been a major issue since early this year, is analyzed to be led by large insurance fraud groups involving brokers centered around insurance planners and hospital specialists.

According to the Financial Supervisory Service, the recently detected cataract insurance fraud type involves broker organizations (hospital promotion companies) signing ‘advertising agency contracts’ with specialized ophthalmology hospitals for cataracts, referring patients, and receiving a certain percentage (30%) of sales as referral fees.

According to the industry, from January 1 to March 11 this year, the insurance payouts for cataract surgeries by domestic non-life insurance companies reached 268.9 billion won, the highest ever. It is understood that some of this money was paid through illegal methods as described above.