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‘Korea needs harsher punishment on insurance fraud’ 

(123RF)
(123RF)


Korea Life Insurance Association, the country’s leading representative of the life insurance industry, called for stronger punishment for insurance fraud crimes.

“Insurance fraud is a grave crime that undermines public interest, but its relatively weak penalties are fueling moral hazards among a wide range of ordinary people,” KLIA said in a press release.

In 2014, authorities caught insurance fraud cases worth 600 billion won ($512 million), up 15.6 percent from a year ago. Yet that number accounts for only 18.7 percent of the 3.2 trillion won KLIA estimates as the total insurance fraud damages of that year. The 3.2 trillion won in insurance fraud damages could cause an extra 200,000 won in insurance fees per household, according to the KLIA.

KLIA said it is seeing an increasing number of people and size of insurance fraud damages, particularly because of the legal loophole for insurance fraud.

Local criminal law does not include a separate article for insurance fraud, classifying the crime under common fraud. As a result, lighter charges are imposed for insurance crime compared to other fraudulent gains.

To curb the leaks from insurance crimes, the KLIA members increased the number of special investigation units from 2 units in 2002 to 19 at present. Thanks to the special investigators, hired at the cost of the insurance companies, an increasing number of insurance fraud cases were caught and turned in to the police. These investigators, however, lack legal investigative authority, leading to difficulties in investigation, KLIA added.

As an alternative, the association called for the launch of exclusive units for insurance crime investigation at the prosecutors’ office and police, to secure efficiency and professionalism in the sector. Strengthening specials laws for insurance fraud is another pressing agenda for insurance crimes, the association stressed.

By Chung Joo-won (joowonc@heraldcorp.com)

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