[1mm Finance Talk] "Even The Police Were Indifferent" As They Grew Weary... Insurance Industry Welcomes FSS Governor's Call For Ex Officio Investigative Authority

Faster Investigations and Stronger Response to Organized Crime Expected
Some Say "FSS Must First Increase Staffing to Ensure Effectiveness"

After Lee Chanjin, Governor of the Financial Supervisory Service, stated that it is necessary for the special judicial police for insurance fraud (special judicial police) to secure the authority to initiate investigations on their own, the insurance industry collectively welcomed the remark. The industry expects that investigation speed will increase and the ability to respond to increasingly sophisticated and intelligent organized crime will be strengthened. However, some point out that if only investigative authority is expanded without additional staffing for bodies such as the Financial Supervisory Service’s Insurance Fraud Response Team, effectiveness could be limited.

According to the insurance industry on February 12, insurance companies interpret Governor Lee’s comment on February 9 that "If the majority of the public demands that this is the area where the Financial Supervisory Service can act most forcefully in relation to people’s livelihoods, the legislative environment will broaden" as showing his interest in expanding the authority to initiate investigations into insurance fraud. In the medium to long term, there are expectations that Governor Lee will support securing such investigative authority for the Financial Supervisory Service and will roll out policy measures to strengthen responses, including increasing the staffing of the Insurance Fraud Response Team.

Until now, the insurance industry has been reporting suspicious cases through their Special Investigation Units (SIUs), which are staffed mainly by former police officers, but the reaction from front-line investigative authorities has been lukewarm. A representative of an insurance company SIU lamented, "Even when we prepare high-quality materials on suspected fraud and provide them to the police and the Financial Supervisory Service, there is little interest and feedback is slow, so it is true that investigative momentum on the ground has been greatly weakened." Within the police, insurance fraud has long been shunned because it carries less weight in performance evaluations than other economic crimes while requiring a great deal of investigative effort.

Currently, when an insurance company SIU files an initial report with the Financial Supervisory Service, the Financial Supervisory Service then has to request an investigation from the police. The industry believes that if the special judicial police within the Financial Supervisory Service obtain direct authority to initiate investigations, this process will be greatly shortened and investigation speed will gain momentum.

However, the "manpower shortage" remains an unresolved issue. At present, the Insurance Fraud Response Team at the Financial Supervisory Service suffers from chronic understaffing, with only one person exclusively in charge of handling reports. An industry official said, "We welcome the Financial Supervisory Service’s strong stance on enforcement, but we must be wary of procedures increasing without any reinforcement of personnel," adding, "If organizational expansion becomes a reality, insurance companies will actively cooperate as well."

According to the Financial Supervisory Service, the amount of insurance fraud detected was 1.0818 trillion won in 2022, 1.1164 trillion won in 2023, and 1.1503 trillion won in 2024, surpassing 1 trillion won for three consecutive years. Meanwhile, the data on the amount detected in 2025 is scheduled to be released next month.