[Shocking Insurance Fraud③] "Insurance Fraudsters Getting Younger, Losing Sense of Guilt"

Young Adults Account for 19% of Criminals, Easily Spreading Fraud Techniques via YouTube and More
Light Punishments Despite Detection, Calls for Stronger Laws Arise

[Asia Economy Reporter Changhwan Lee] Experts on insurance fraud have analyzed that insurance fraudsters are getting younger and their sense of guilt is diminishing.

The trend of easily accessing and implementing insurance fraud methods through social network services (SNS) such as YouTube and Facebook is also intensifying.

Experts argue that active government crackdowns, strengthening punishments through related law amendments, and changes in individuals' perception that insurance fraud is a serious crime are necessary.

On the 29th, Kwon Seonghoon, Deputy Director of the Insurance Fraud Response Division at the Financial Supervisory Service (FSS), said, "Recently, insurance fraudsters are getting younger," adding, "This trend is worsening as insurance fraud methods are easily spread through SNS like YouTube."

According to the FSS, among the insurance fraudsters caught domestically last year, those in their 20s accounted for 19%, a significant increase from 15% in 2019. Fraudsters aged 10 or younger also made up 2%.

Deputy Director Kwon analyzed, "Insurance fraud among young people is concentrated on automobile insurance frauds such as intentional car collisions and driver substitution," adding, "It seems that as the economy worsens, more people in their 20s commit bad acts to make easy money."

He added, "Insurance fraud has been increasing by about 5% annually over the past few years," and "The economic downturn and relatively lenient punishment standards compared to other crimes are also seen as problems."

A general lack of guilt about insurance fraud compared to other crimes is also identified as a factor in the increase of insurance fraud. Insurance fraudsters mostly receive light punishments such as small fines or suspended sentences even when caught.

Kim Heekyung, head of the Insurance Fraud Prevention Team at the Life Insurance Association, said, "Except for cases involving violent crimes such as murder, arson, or injury, insurance fraudsters do not have a strong sense of guilt about insurance fraud," adding, "Especially in cases of soft insurance fraud like false or excessive hospitalization, the lenient social atmosphere, including light punishments such as small fines or suspended sentences by the courts, is a contributing factor."

As insurance fraud continues to increase, the National Assembly enacted the Special Act on the Prevention of Insurance Fraud in 2016, but it has been criticized for its lack of effectiveness. Although lawmakers have repeatedly proposed amendments to expand government crackdown authority and strengthen legal punishments, these bills have not passed.

Kim pointed out, "Although the Special Act on the Prevention of Insurance Fraud was enacted for effective eradication, insurance fraud has continued to increase," adding, "The proposed amendments to enhance the law's effectiveness are still pending in the National Assembly, and there has been no revision since its enactment."

She emphasized, "Insurance fraud committed by insurance industry workers with specialized knowledge has a significant social impact, so heavier penalties are needed compared to the general public," and "It is also necessary to impose economic sanctions such as the return of fraudulently obtained insurance money and contract cancellations to instill a strong awareness of punishment for insurance fraud."

Compared to major advanced countries, South Korea has a relatively high rate of insurance fraud. According to data surveyed by the FSS in 2019, as of 2018, the proportion of money lost to insurance fraud out of the total insurance premiums paid in South Korea was 4.3%. This is higher than European advanced countries such as France at 2.3% and the UK at 1.3%. Meanwhile, the United States had a higher rate at 6.7%.

Insurance fraud is recognized as a major problem worldwide, and countries actively respond by establishing dedicated fraud units. According to the Korea Insurance Research Institute, in the U.S., state insurance departments or state attorney general and prosecutor offices have dedicated insurance fraud units. In the UK, a private organization called IFB (Insurance Fraud Bureau) responds at the industry level.

In contrast, South Korea is criticized for lacking a control tower, resulting in insufficient cooperation among agencies. The legal system is not well organized, making cooperation between public and private insurance difficult.

Since 2021, the FSS, National Health Insurance Service, and the Life and Non-life Insurance Associations have formed a working-level consultative body, including the 'Public-Private Insurance Fraud Joint Investigation Council,' to jointly respond to actual loss insurance fraud, but there are criticisms that consensus is difficult and effectiveness is low.

Byun Hyewon, a research fellow at the Korea Insurance Research Institute, emphasized, "Currently, measures to prevent excessive medical treatment are being discussed through the public-private insurance consultative body, but continuous cooperation for sharing and analyzing public and private health insurance data and preparing improvement plans based on analysis results are necessary."