Faking Illness
86 Billion Won in Auto Insurance Money Abused in 2008
``Go to a hospital bed and pretend to be ill even if you do not incur serious injuries." Korean adults have been told to do this whenever a traffic accident occurs. This practice has not changed much as many still fake injury in a bid to get more money for treatment fees and compensation from auto insurance companies. What's more worrisome is that insurers and regulators have done little to prevent this illicit act of extorting insurance money.
According to the General Insurance Association of Korea, payments of some 86.5 billion won ($75.8 million) were provided to those who were hospitalized after sustaining minor injuries that did not need them to be inpatients. These were made in the 2008 fiscal year ending March 31, 2009. For auto insurance subscribers, the payments were a waste of their money. That is, people could pay lower insurance premiums if insurers would ferret out fake patients and withhold money from them.
The number of people involved in traffic accidents was estimated at 1.39 million in 2008. And 60.6 percent of them were hospitalized for treatment. The figure was down from 63.5 percent in 2007, 68 percent in 2006, 70.8 percent in 2005 and 71.9 percent in 2004. But it was over nine times higher than Japan's 6.4 percent. And 88,000 or about 10 percent of the inpatients were found to be ``absentee patients" who did not actually stay in hospital for treatment. In collaboration with hospitals, they presented fake medical documents to get coverage from insurance firms.
How could such illegal provisions be made possible for those greedy seekers of insurance money? Both insurance companies and hospitals cannot shirk their responsibility for this. Doctors are to blame for admitting fake auto accident patients in pursuit of profits. It might be seen as natural for hospitals to prefer traffic accident victims over other patients because the auto insurance coverage is 12 percent higher than that of the national health insurance for ordinary cases.
Auto insurance firms are also criticized for not making any effort to prevent people with sham injuries from abusing their coverage. They have just been raising premiums to make up for the losses arising from feigned injuries. They should no longer neglect their obligations to avoid the waste of subscribers' contributions and protect their interests.
The financial regulators have also been sitting on their hands without doing anything to rectify the serious problem. Only the presidential Anti-Corruption and Civil Rights Commission has recently recommended that an auto insurance review and assessment body be set up to screen eligible applications for coverage and to detect fake patients. But hospitals and insurance companies are reluctant to accept the recommendation, fearing inevitable government intervention in their operations.
We urge hospitals and insurers to change their position and cooperate in establishing such a screening entity in order to better protect subscribers' interests. Pretending to be hurt and pocketing auto insurance coverage undoubtedly constitutes a crime. Those benefiting from the legal loopholes will also have to pay higher insurance premiums when they, as drivers, are involved in traffic accidents.