Travel Psychology Heats Up... 'Trick' of Claiming Duplicate Insurance Payouts Rises Among Multiple Insurers

When Insurance Fraud Is Detected
Up to 10 Years Imprisonment or 50 Million Won Fine
"Information Sharing Cooperation Among Private Insurance, Similar Insurance, and Public Insurance Is Important"

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] Ms. Jeong Suran (36, pseudonym) claimed that her entire backpack was stolen at a bus stop during her trip to the Philippines and filed insurance claims with four insurance companies. To maximize the coverage amount, she included dozens of high-value items such as an iPad and earrings in her claim, but after investigations by the insurers, it was discovered to be insurance fraud. Ms. Kim Mihui (29, pseudonym) reported that her suitcase was stolen while taking photos at 00 Park in Barcelona. However, after A Fire Insurance confirmed with hotel staff and others, it was revealed to be a false theft report, and Ms. Kim eventually gave up on claiming the insurance money.

"Let's travel abroad to the US and Europe"... Increase in demand leads to rise in travel insurance fraud

As social distancing measures have eased and overseas travel has revived, 'travel insurance fraud' is also on the rise. Most cases involve either false claims of theft or duplicate claims filed with multiple insurance companies. Fraudsters exploit the difficulty of detection since the incidents occur abroad. Travel insurance compensates for unexpected accidents, illnesses, loss or theft of personal belongings, and liability damages during travel. Since the insurance coverage period is limited to the travel duration, the premiums are generally lower compared to other types of insurance.

A representative from A Fire Insurance said, "Recently, there have been many cases where people take out insurance policies with multiple companies and claim benefits multiple times. While life insurance involves large sums and is strictly monitored and managed, travel insurance does not have such stringent oversight." A detective from a Seoul police station stated, "As travel demand recovers, travel insurance fraud inevitably increases. However, since the amounts involved are not large, insurance companies often detect and handle the cases internally."

Insurance Fraud Prevention Act applies: up to 10 years imprisonment or fines up to 50 million KRW

Although insurance fraud often involves small amounts, it is considered a serious crime with severe penalties. When detected, the Insurance Fraud Prevention Act applies instead of general criminal fraud laws, imposing up to 10 years imprisonment or fines up to 50 million KRW. Regarding this, Byeon Hyewon, a research fellow at the Korea Insurance Research Institute, stated, "For the prevention and detection of insurance fraud, information sharing and cooperation among private insurance, quasi-insurance, and public insurance are very important. It is also necessary to enhance the usability of insurance-related information accumulated at the Credit Information Center."

Meanwhile, interest in travel insurance has significantly increased with the rise in overseas travel. According to the new contract numbers for overseas travel insurance from the five major non-life insurers (Samsung Fire & Marine Insurance, Meritz Fire & Marine Insurance, DB Insurance, KB Insurance, Hyundai Marine & Fire Insurance), the number of insured persons in April reached 22,427, a fivefold increase compared to the previous year.