First Amendment Process in 8 Years Since the Enactment of the Related Law in 2016
The long-awaited "Special Act on the Prevention of Insurance Fraud" in the insurance industry passed the National Assembly on the 25th. This marks the first revision since the related law was enacted in 2016, eight years ago.
According to the Financial Services Commission on the 25th, the Insurance Fraud Prevention Act primarily prohibits and penalizes acts such as mediation and advertising of insurance fraud. The recent amendment was prepared to respond more effectively to the increasing amount and number of detected insurance fraud cases, as well as the frequent occurrence of organized and sophisticated insurance fraud. It strengthens the investigation authority on insurance fraud and includes provisions to prohibit and punish mediation, inducement, solicitation, or advertising of insurance fraud.
Acts of mediation, inducement, solicitation, or advertising of insurance fraud are prohibited, and violators may face imprisonment of up to 10 years or a fine of up to 50 million KRW. Even before insurance fraud occurs, those who mediate or advertise such acts can be punished.
The amendment strengthens the financial authorities' investigation rights to examine suspicious cases of mediation, inducement, or advertising of insurance fraud and to carry out follow-up measures such as reporting to related agencies and requesting investigations more effectively. Going forward, investigative agencies or the Korea Communications Commission will be able to take swifter action against acts such as receiving duplicate insurance payments through insurance fraud or providing guidance or posting methods for fraud.
When investigative agencies request the Health Insurance Review and Assessment Service (HIRA) to conduct an appropriateness review of hospitalization, HIRA is now required to establish its own review standards. The appropriateness review of hospitalization is a process where investigative agencies request HIRA to assess whether the hospitalization of an insured person is appropriate for investigating insurance fraud. This is expected to enable more systematic and prompt reviews in the future.
The law also formalizes a victim relief system that requires insurance companies to notify policyholders who have suffered disadvantages such as premium surcharges due to automobile insurance fraud about the damage and subsequent procedures. This system institutionalizes what insurance companies have voluntarily implemented since 2009. The government plans to actively identify improvements related to the relief of insurance fraud victims going forward.
A Financial Services Commission official stated, "We will prepare for the implementation of the law without any setbacks, including the establishment of subordinate regulations," and added, "We will actively respond to insurance fraud, which is evolving in an organized and sophisticated manner, in cooperation with related agencies such as the National Police Agency, the Financial Supervisory Service, and the Health Insurance Review and Assessment Service."
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