FSS: "Immediate Expulsion Upon Insurance Fraud Verdict... Support for Legal Amendments"

Executives' Meeting on Insurance Fraud Response Organizations
Annual Losses Reach 8 Trillion Won...
FSS Urges Stronger Internal Controls at Insurance Companies

The Financial Supervisory Service (FSS) called in executives of insurance companies' Special Investigation Units (SIU) to announce this year's key initiatives for combating insurance fraud and discuss cooperation measures. They stated that they will strengthen their response, including actively supporting amendments to the Insurance Business Act to immediately expel those with confirmed insurance fraud convictions from the market. Insurance companies were urged to strengthen their internal controls.

Financial Supervisory Service, Yeouido, Seoul. Photo by Younghan Heo younghan@

The FSS announced that on the 23rd, Kim Seong-wook, Deputy Director in charge of Public Welfare, held an SIU executives' meeting at the Life Insurance Education and Culture Center in Jung-gu, Seoul, emphasizing these points. The meeting was attended by FSS officials including Deputy Director Kim, the Life and Non-life Insurance Associations, and 73 SIU executives and department heads from 36 insurance companies.

Deputy Director Kim said, "Since insurance fraud is a representative financial crime that increases the burden on the public, please make efforts to eradicate organized insurance fraud involving insurance planners, hospitals and clinics, and brokers," and urged, "Strengthen internal controls within insurance companies and have management take an active interest in insurance fraud."

The attendees discussed this year's insurance fraud response plans, research results from the Korea Insurance Research Institute, excellent cases of insurance fraud detection, and measures to strengthen internal controls within insurance companies.

The FSS stated that they discussed measures to eradicate insurance fraud involving insurance industry workers such as insurance planners this year. They said they will support amendments to the Insurance Business Act to immediately expel insurance planners and others who receive confirmed fraud-related convictions from the market. They will also strengthen planned investigations into organized insurance fraud linked to hospitals and clinics, as well as fraud involving falsified or altered medical certificates. Opinions were exchanged on focused monitoring plans for inducement and solicitation activities related to insurance fraud. They discussed data sharing and investigative support measures between investigative authorities and public/private insurance.

Insurance companies were urged to strengthen internal controls related to fraud investigations. The FSS shared the results of last year's internal control inspections related to insurance fraud investigations and ordered reinforcement of internal controls where deficiencies were found. In particular, they emphasized strengthening insurance companies' own disciplinary standards for planners involved in insurance fraud. They also called for guaranteeing the independence of SIU organizations to enhance the effectiveness of internal control strengthening.

On the day, the FSS shared the results of the Korea Insurance Research Institute's industry research project from the second half of last year with the industry. The investigation found that the estimated amount of private insurance fraud in 2023 was 8.2 trillion won, a 41% increase from 5.8 trillion won in 2018. The increase in insurance fraud was analyzed to be due to the growth in the scale of paid insurance benefits (protection-type) to 65.9 trillion won in 2023, up 48% from 44.6 trillion won in 2018. The Korea Insurance Research Institute suggested that it is necessary to consider the introduction of an integrated information system between public and private insurance in the long term.

Additionally, they shared excellent detection cases selected at last year's insurance fraud prevention competition with the industry. These included detection of proxy diagnosis insurance fraud related to brain and cardiovascular diseases and cases analyzing insurance fraud suspects using artificial intelligence (AI)-based technology.

The FSS stated, "We will strengthen cooperation systems not only with the insurance industry but also with investigative and health authorities, and enhance investigative support for the police through planned investigations and investigative councils," and urged, "We ask the public to actively report any suspected cases of insurance fraud to the FSS."