[Insurance Tip]⑬ How to Avoid Insurance Fraud When You Unknowingly Get Involved

[Asia Economy Reporter Changhwan Lee] Mr. A caused a traffic accident by driving a vehicle in a drunken state in Seoul in 2019, hitting a facility. Mr. A concealed the fact that the accident occurred during drunk driving and filed an insurance claim, receiving several million won in insurance money, but was criminally charged with insurance fraud by the insurance company.

Mr. B succeeded in a hole-in-one at a golf course in Yongin, Gyeonggi Province, just a few days after subscribing to hole-in-one insurance in 2017. Three days later, Mr. B submitted a hole-in-one certificate and credit card receipts claiming expenses for the hole-in-one to the insurance company and received 4 million won in insurance money. However, it was revealed that Mr. B had never actually incurred any hole-in-one expenses, and he was sentenced to a fine after being brought to trial.

In recent years, the scale of domestic insurance fraud has rapidly increased, becoming a social problem.

According to the Financial Supervisory Service, the amount of insurance fraud detected annually reached 730.2 billion won in 2017, 880.9 billion won in 2019, and 943.4 billion won in 2021. This year, the detected amount is expected to exceed 1 trillion won for the first time.

The increase in insurance fraud is attributed to the worsening economy leading more people to seek easy money, a lack of guilt due to relatively lenient punishments compared to other crimes, and the involvement of younger generations in crimes.

The proportion of ordinary citizens such as office workers, housewives, and students detected for insurance fraud is increasing, and there are more cases where people do not realize their actions constitute crimes and commit fraud in their daily lives.

A representative example of everyday insurance fraud is automobile insurance fraud. Automobile insurance fraud accounted for 60% of all detected insurance fraud cases by number of people last year and 45% by amount, making it a significant portion.

Sixty-one percent of automobile insurance fraud cases are detected due to manipulation of accident details. Typical cases include hiding drunk driving or changing the driver to claim insurance money, which is not payable in drunk driving accidents.

Fraudsters also induce patients or vehicle owners, who lack awareness of insurance fraud, to falsely claim insurance money by suggesting it can reduce their costs, and such acts are also considered insurance fraud.

Falsely claiming insurance money by fabricating accidents that did not actually occur is also clear insurance fraud.

With the increase in overseas travel, more people are subscribing to travel insurance. However, there have been cases where people falsely claim insurance money by pretending that lost items such as cameras or smartphones were stolen during overseas travel. This exploits the difficulty insurance companies have in directly verifying accidents that occur abroad.

The Financial Supervisory Service warned that engaging in illegal acts such as deliberately causing accidents by baiting with high-paying part-time jobs or high daily wages also constitutes insurance fraud and should never be accepted.

Hospitals or repair shops that induce false reports of accident locations, times, or details to insurance companies are likely to be insurance fraud organizations.

There are also cases where people become involved in insurance fraud at the request of close acquaintances. For example, a restaurant owner was caught after manipulating an employee who was injured by falling in the restaurant to appear as a customer in order to claim business liability insurance money.

The Financial Supervisory Service emphasized that if asked to help deceive an insurance company to receive insurance money, one could become involved in insurance fraud and must refuse such requests.