[Asia Economy Reporter Changhwan Lee] The scale of insurance fraud in South Korea has been rapidly increasing every year. In recent years, not only teenagers but also young people in their twenties have been actively involved in insurance fraud, prompting calls for stronger countermeasures such as intensified crackdowns and tougher related laws.
According to the Mapo Police Station in Seoul on the 16th, 144 members of a gang who deliberately caused traffic accidents across the country over the past two years and embezzled a total of 1.6 billion KRW in insurance money were recently arrested by the police.
They are suspected of causing 218 intentional traffic accidents over two years from November 2019 to December last year in various regions including Seoul, Incheon, and Busan by targeting vehicles that violated traffic laws or changed lanes, and pocketing 1.6 billion KRW in insurance money.
They used a method of causing minor collisions by targeting vehicles that abruptly changed lanes or switched to a lower lane at intersections, then demanding the other drivers to file insurance claims.
According to the police investigation, they recruited accomplices through social networking services (SNS) advertising high-paying part-time jobs. The police expressed particular concern over the sharp increase in traffic accident insurance fraud among young people. Among the 144 suspects arrested this time, all but one were in their teens or twenties. There were 119 suspects in their twenties and 24 in their teens.
Insurance fraud is increasing not only among young people but also across society as a whole. According to the National Police Agency, the number of insurance fraud cases (violations of the Special Act on the Prevention of Insurance Fraud) and suspects arrested increased from 1,193 cases and 2,658 people in 2017 to 3,361 cases and 11,491 people in 2021. Compared to 2017, the number of cases in 2021 increased 2.8 times, and the number of suspects arrested increased 4.3 times.
Recently, organized insurance fraud involving online recruitment of conspirators to cause accidents targeting vehicles violating traffic laws, as well as corporate brokers linked with hospitals, has frequently occurred. The police also revealed that there are cases of fraud linked to violent crimes such as murder aimed at insurance money, raising significant public concern.
In response, the National Investigation Headquarters of the National Police Agency plans to conduct a special crackdown on insurance fraud crimes for four months from October 4 to October 31.
In the political and insurance sectors, there have been ongoing calls to amend the Special Act on the Prevention of Insurance Fraud to strengthen punishments for insurance fraud offenders. Members of the National Assembly, including Yoon Changhyun of the People Power Party and Hong Seongguk of the Democratic Party, have proposed amendments to the Special Act on the Prevention of Insurance Fraud that include enhanced penalties for insurance planners.
Hwang Hyun-ah, a research fellow at the Korea Insurance Research Institute, emphasized in a report titled "Characteristics and Countermeasures of Insurance Fraud" that "The Special Act on the Prevention of Insurance Fraud was enacted to effectively respond to insurance fraud, but it only regulates the minimum requirements, limiting its role as a comprehensive and effective legal basis for response." She added, "To achieve a comprehensive, proactive, and effective response to insurance fraud, it is necessary to reorganize the framework of the Special Act and expand its contents."
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