Insurance Frauds Soar to 23,000 Amid Slump
By Lee Hyo-sik
Staff Reporter
Cases of insurance fraud here surged in the first half of the year from a year earlier, with more individuals resorting to desperate, illegal acts to cope with worsening economic conditions.
According to the Financial Supervisory Service (FSS), Thursday, a total of 22,810 people were caught for various types of insurance scams from January through June this year, up 44 percent from the same period in 2008. About 146 billion won in insurance money was paid to the fraudsters by life and non-life insurers, up 33.6 percent over the one-year period.
Among others, staging fake and deliberate accidents accounted for nearly 54 percent of the total insurance frauds. By age, people in their 30s and 40s committed more than half of the insurance scams. A growing number of teenagers and 20-somethings were engaged in the illegal acts, up 157 percent and 64.3 percent, respectively, from the previous year.
The regulator said more youths these days are involved in insurance frauds as a systematic way to raise spending money. In June, police caught a group of 108 individuals, including several high school students, engaged in a wide range of frauds. For instance, they deliberately had themselves hit by a car to receive compensation money from insurance companies.
Out of the 22,810 swindlers, unemployed and daily workers accounted for 30 percent, or 6,854, followed by salaried workers at 13 percent and self-employed at 9.2 percent.
^Another example of the fraud involves the owner of an adult game room in Busan who was caught in May. In December 2007, he deliberately had his legs severed by a train to receive insurance money as he was facing financial difficulties from declining income and rising back taxes.
The most frequently abused insurance product was auto insurance, with more than 87 percent of the scams involving car insurance.
``Facing the greatest economic hardship since the 1997-98 Asian financial crisis, an increasing number of people particularly in the low-income bracket decided to commit insurance frauds for money. But this forces life and non-life insurance firms to pay unwarranted benefits, which increases premiums for the majority of subscribers. We will continue to closely monitor insurance payment claims and expose scams,'' a FSS official said. In July, the FSS, police and other relevant government agencies formed a task force to clamp down on insurance fraud.