Hole-in-one golf insurance policy exploited by fraudsters

The Korea Times

The Korea Times

Finance

Sun, September 24, 2023 | 00:51

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Hole-in-one golf insurance policy exploited by fraudsters

Posted : 2022-06-30 08:36

Updated : 2022-07-04 12:30

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By Anna J. Park

Various golf-related insurance policies are thriving, as the number of frequent golfers has increased over the pandemic period in the country. While the specifics of the various insurance coverage differ according to each product, most local golf insurance policies cover injuries, damages or vehicle accidents at golf courses, as well as hole-in-one related incentive payments and costs.

As hole-in-ones for amateur golfers are extremely rare ― with only a one in 12,000 chance on average ― some local golf insurance firms either grant incentive payments to their golf insurance policy holders if they hit a hole-in-one or compensate costs incurred by the golfer due to celebrations for the hole-in-one events.

Yet, local insurance firms' benefits policies tend to have shifted towards reimbursement of costs incurred by golfers, upon submitting receipts of such costs, rather than simply granting hole-in-one congratulatory gift money. That's because a fraudulent partnership with caddies and a golfer could easily create a false verification about hitting a hole-in-one, deceiving insurance firms and thereby forcing them to cover false claims.

According to the Financial Supervisory Service (FSS), the country's financial watchdog agency, an insurance policy holder collaborated with 14 other policy holders and caddies, falsely reporting 18 cases of a hole-in-one during a three-year-period, obtaining 67 million won ($51,000) from insurance companies.

Due to such rampant fraud, insurance companies now demand receipts by policy holders, proving exactly how much they spent related to their hole-in-one events, as a prerequisite for the reimbursement of the expenditure via the insurance coverage.

However, many fraud cases have also been detected regarding deceitful reimbursements. For instance, a golf insurance policy holder allegedly paid hole-in-one congratulatory dinner costs with his card, and immediately canceled the payment. But still, he submitted the card payment receipt to his insurance company so as to be reimbursed.

These cases constitute the tip of the iceberg and are increasing both in the frequency and in the damages paid. The FSS has vowed to sternly respond to such insurance fraud cases, recently imposing punishments on 25 insurance planners from 13 local insurance companies and brokerage general agency companies earlier this month.

According to the Korea Insurance Research Institute, the total amount of fraudulent money related to insurance fraud cases stood at 943.4 billion won last year, which is up five percent year-on-year.

annajpark@koreatimes.co.kr