[Shocking Insurance Fraud⑥] Young People Hooked on 'Boheombbang'... Behind Bars in Their 20s

Annual Average 15.7% Surge in Insurance Fraud Among 20s Over the Past 3 Years
Economic Downturn Leads to Temptation of Easy Money Making

[Asia Economy Reporter Changhwan Lee] # In 2020, Mr. A, a man in his 20s living in northern Gyeonggi Province, recruited people willing to attempt insurance fraud through local seniors and juniors or internet cafes. They would ride together in a vehicle and deliberately cause traffic accidents by targeting vehicles violating lane change rules. They then received settlement money from insurance companies, fraudulently obtaining about 1 billion KRW in insurance payouts. The Uijeongbu Police Station arrested a total of 108 people involved directly or indirectly in the insurance fraud, including six ringleaders such as Mr. A. Most of those involved in the insurance fraud were young adults in their late teens to early 20s who were new to society.

In recent years, the number of people in their 20s involved in insurance fraud has increased significantly. According to the Financial Supervisory Service, 2 out of 10 insurance fraudsters caught domestically last year were in their 20s. Over the past three years, the annual average growth rate of insurance fraud by people in their 20s reached 15.7%.

They mainly focused on automobile insurance fraud. Last year, 83.1% of insurance fraud committed by people in their 20s was related to automobile insurance. Among automobile insurance frauds, intentional collisions, commonly called ‘boheombbang’ (insurance collision fraud), were the biggest problem.

Boheombbang is a method of insurance fraud where perpetrators deliberately cause collisions by targeting vehicles violating traffic laws such as lane changes, or where the perpetrator and victim collude to cause a traffic accident intentionally to claim insurance money. Intentional collisions accounted for about 40% of automobile insurance fraud committed by people in their 20s. Following that were drunk driving without a license (12.6%) and driver substitution (8.2%).

Boheombbang was carried out in an organized manner. One or two leaders recruited dozens of participants to carry out the fraud. Initially, they recruited acquaintances nearby, but later expanded nationwide through social networking services (SNS) such as internet cafes, YouTube, and Instagram.

On internet cafes known to gather many insurance fraudsters, posts recruiting participants for insurance fraud appeared with messages like "Looking for 경기 ㄷㅋ (rear-end collision) attackers" and "Anyone to do 충청도 ㄷㅋ (rear-end collision)?"

In September 2020, a group of 53 insurance fraudsters arrested by the Seoul Metropolitan Police Agency was also a conspiracy by teenagers and people in their 20s. This group, formed of local seniors and juniors, rented cars and deliberately collided with vehicles violating traffic laws, then received settlement money from insurance companies, fraudulently obtaining about 200 million KRW in insurance payouts.

They started the fraud in a city in the metropolitan area, but when similar insurance fraudsters became saturated in that area, they moved to the Gangnam area of Seoul to continue committing insurance fraud.

Increase in Livelihood Insurance Fraud Among Young People as Economy Worsens

The sharp increase in insurance fraud among people in their 20s is analyzed to be due to many young people facing economic difficulties amid the recent economic downturn. Especially after COVID-19, as jobs decreased, more people joined insurance fraud thinking it was an easy way to make money.

An insurance industry official said, "There were cases where people in their 20s who could not find part-time jobs due to COVID-19 got involved in fraud," emphasizing, "People should not fall for the temptation of making easy money."

There are also claims that automobile insurance is structurally too vulnerable to insurance fraud. Last year, 59.8% of all detected insurance fraud cases by number of people caught were related to automobile insurance, and this trend is increasing every year. Cases such as ‘naillong patients’?people who stay hospitalized for weeks despite minor accidents and no serious injuries?or those who demand false settlement money without being injured occur frequently.

It is also reported that many fraudsters commit crimes boldly because they know the penalties are mild even if caught. Therefore, the insurance industry argues that penalties should be strengthened through amendments to the Special Act on Insurance Fraud Prevention.

The increase in insurance fraud ultimately results in damage to many honest insurance policyholders. Last year, the amount detected in insurance fraud reached a record high of 943.4 billion KRW. This directly increases the financial burden on public insurance. Other policyholders end up having to pay higher premiums.

Kim Kiyong, head of the Insurance Fraud Investigation Team at the General Insurance Association, explained, "The increase in medical utilization due to insurance fraud worsens not only private insurance such as indemnity insurance but also the finances of public health insurance. Especially indemnity insurance is a product whose premiums fluctuate through rate adjustments, so if the total unexpected insurance payouts increase due to insurance fraud, it causes a premium increase burden on many honest indemnity insurance policyholders."