FSS, police uncover organized insurance fraud ring

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An organized insurance fraud ring consisting of brokers, hospitals and fake patients has been uncovered. The group obtained fraudulent insurance payments totaling 2.1 billion won ($1.5 million) from insurance companies.

According to the Financial Supervisory Service (FSS), the case was first reported by its insurance fraud reporting center earlier this year. After the financial regulator conducted its own investigation, it requested an investigation by the Seoul Metropolitan Police Agency.

The FSS detailed how the insurance fraud racket operated: A "mastermind" set up a broker organization that included gangsters as well as insurance planners. When the brokers recruited fake patients, doctors associated with the broker group issued false surgical records from a hospital. At the same time, fake patients inflicted wounds on themselves to simulate surgical scars and file fraudulent insurance claims.

Then, insurance planners, who analyzed the insurance coverage details for the fake patients recruited by the organization, helped them enroll in additional insurance policies, facilitating the submission of false insurance claims.

Two medical professionals were involved in their crimes. They used Telegram to share lists of fake patients with the brokers and were rewarded commissions based on their monthly performance.

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The number of fake patients, comprising many criminal gang members, totaled around 260. These fake patients typically stayed at the hospital for six hours, undergoing simple procedures like blood tests to receive false medical records. They each claimed an average of 8 million won, totaling about 2.1 billion won.

This case marks the first achievement following the partnership agreement signed earlier this year between the FSS and the police agency to eradicate organized insurance fraud involving brokers and hospitals.

"Insurance fraud undermines the foundation of the country's insurance system, as it leads to higher premiums for honest policyholders. The FSS will continue to actively collaborate with the police to root out insurance fraud," the FSS said.