[Shocking Insurance Fraud⑦] Like Leaving Fish to a Cat... Agent Also Involved in Fraud

Financial Supervisory Service Uncovers Large Number of Insurance Agents Involved in Insurance Fraud

[Asia Economy Reporter Changhwan Lee] It has been revealed that insurance agents, who should be actively involved in preventing insurance fraud, are largely implicated in such fraud, causing shock. There are claims that measures need to be established as more than 1,000 insurance agents are involved in insurance fraud every year, indicating serious moral hazard.

According to the insurance industry on the 27th, the Financial Supervisory Service's Insurance Fraud Response Team recently conducted inspections on life insurance companies, non-life insurance companies, and General Agencies (GA), uncovering that about 30 current and former insurance agents from 13 companies were involved in insurance fraud, resulting in sanctions such as fines and business suspensions.

The insurance agents caught in this inspection were affiliated with a variety of organizations, ranging from major insurers like Samsung Life Insurance, Kyobo Life Insurance, and DB Insurance to General Agencies such as Saean Bank, Prime Asset, and KG A Asset.

An insurance agent A from Kyobo Life Insurance falsely obtained a hospitalization certificate claiming to have been hospitalized for 10 days in 2018 despite never having been hospitalized, and received 3.74 million KRW in insurance payouts. Agent A was suspended from work for 180 days.

Samsung Life Insurance also canceled the registration of one insurance agent related to insurance fraud, and three others were sanctioned with a 180-day suspension from new insurance solicitation activities. Samsung Life Insurance agent B submitted false documents claiming to have received 18 sessions of manual therapy in 2015, when in fact only 7 sessions were manual therapy and the rest were obesity treatments, receiving 2.73 million KRW in insurance payouts.

DB Insurance agent C, after visiting a clinic for a minor illness in 2016, was persuaded by the hospital clerk to be hospitalized, then filed insurance claims with forged medical certificates and caused nine falsely hospitalized patients to receive insurance payouts, leading to a 180-day suspension.

Insurance agents affiliated with General Agencies were also widely caught. Prime Asset insurance agent D submitted a card sales slip to claim insurance after making a hole-in-one during a golf game in 2017, despite immediately canceling the card approval after paying the hole-in-one celebration fee, resulting in detection.

KG A Asset insurance agent E, while working as a nursing assistant in 2016, manipulated medical statements to make it appear that falsely hospitalized patients received normal inpatient treatment, enabling 130 insured persons to receive a total of approximately 290 million KRW in insurance payouts, which was uncovered.

The number of insurance agents caught for insurance fraud exceeds 1,000 annually, with 1,250 in 2018, 1,600 in 2019, 1,408 in 2020, and 1,178 in 2021. There are concerns about serious moral hazard as agents who should lead efforts to prevent insurance fraud are often the main perpetrators.

According to the Financial Supervisory Service, the amount detected for domestic insurance fraud last year reached a record high of 943.4 billion KRW. It is also pointed out that the scale of insurance fraud is increasing as insurance agents are frequently involved in major insurance fraud cases.

Calls for harsher penalties for insurance agents committing insurance fraud are growing. Members of the National Assembly, including Yoon Chang-hyun of the People Power Party and Hong Sung-guk of the Democratic Party, have proposed amendments to the Special Act on the Prevention of Insurance Fraud to impose aggravated punishment on insurance agents.

An industry insider said, "Insurance fraud involving insurance experts such as agents is more difficult to detect and tends to be larger in scale," adding, "Along with insurers' own efforts, strengthening legal regulations is necessary."