CONTENTS
- 1. Insurance Fraud | Definition
- - Types
- 2. Insurance Fraud | Sanctions
- - Levels of Criminal Punishment
- - Employment Restrictions and Prohibition of Authorization and Approval
- - Exemption from Insurance Payment and Invalidation or Termination
- 3. Insurance Fraud | Response Strategy
- - Early Stage of the Investigation
- - Trial Stage
- 4. Insurance Fraud | When Responding Alone Is Difficult
1. Insurance Fraud | Definition
Insurance fraud is a crime that is established by deceiving the insurer as to the occurrence, cause, or content of an insured event and claiming insurance proceeds.
It is subject to aggravated punishment compared with the crime of fraud under the general Criminal Act and is governed by the Special Act on Prevention of Insurance Fraud.
Although it is a type of fraud, the criminal proceedings are conducted on the charge of violating the Special Act on Prevention of Insurance Fraud rather than the general crime of fraud.
Types
① Conclusion of an insurance contract based on false facts
② Intentional causing of an insured event
③ Fabrication and disguise of an insured event
④ Exaggeration of the fact of damage
2. Insurance Fraud | Sanctions
If a person is implicated in insurance fraud, sanctions such as employment restrictions and termination of insurance may be imposed in addition to criminal punishment.
Levels of Criminal Punishment
The Special Act on Prevention of Insurance Fraud, which governs insurance fraud, is a law that prescribes matters concerning the investigation, prevention, and punishment of insurance fraud.
It aims to protect the rights and interests of policyholders, the insured, and other interested parties, and to contribute to the sound development of the insurance business and the improvement of public welfare.
Where insurance fraud is established, it is punished under Article 8 of the Special Act on Prevention of Insurance Fraud.
▶ Article 8 (Crime of Insurance Fraud)
| A person who, through an act of insurance fraud, obtains insurance proceeds or causes a third party to obtain insurance proceeds | Imprisonment for up to 10 years or a fine of up to 50 million won |
A person who arranges, induces, solicits, or advertises an act of insurance fraud
| |
Habitual offenders | Aggravated punishment by up to one half of the penalty prescribed for that crime |
In addition, where the value of the insurance proceeds obtained through the criminal act, or caused to be obtained by a third party, exceeds a certain amount, aggravated punishment applies under Article 11, and the levels of punishment are as follows.
▶ Article 11 (Aggravated Punishment of the Crime of Insurance Fraud)
| When the amount of gain from insurance fraud is 5 billion won or more | Life imprisonment or imprisonment for at least 5 years
|
| When the amount of gain from insurance fraud is 500 million won or more but less than 5 billion won | Imprisonment for a definite term of at least 3 years |
Employment Restrictions and Prohibition of Authorization and Approval
Where a person who commits insurance fraud or a habitual offender obtains insurance fraud gains of 500 million won or more and receives aggravated punishment, their employment at certain institutions may be restricted for the following periods.(Articles 11 and 16 of the Special Act on Prevention of Insurance Fraud, and Article 14(1) and (6) of the Act on Aggravated Punishment of Specific Economic Crimes)
▷ Two years from the date on which the period of suspended execution of the imprisonment sentence ends
▷ The period of suspension of sentencing of the imprisonment sentence
The institutions subject to the employment restriction are as follows.
② Institutions in which the State or a local government has invested all or part of the capital, and institutions that receive their contributions or subsidies
③ Enterprises closely related to the criminal act for which a conviction was rendered
In addition, a person who commits insurance fraud or a habitual offender who has received aggravated punishment, or an enterprise that has such a person as its representative or officer, cannot obtain a permit, authorization, license, registration, designation, or the like for a government-licensed business during the above periods.
If this is violated, the person is subject to imprisonment for up to one year or a fine of up to 5 million won. (Articles 11 and 16 of the Special Act on Prevention of Insurance Fraud, and Article 14(2) and (6) of the Act on Aggravated Punishment of Specific Economic Crimes).
Exemption from Insurance Payment and Invalidation or Termination
If it is revealed that a policyholder, the insured, or a beneficiary intentionally committed insurance fraud, the insurance company has no obligation to pay the insurance proceeds.
In addition, an over-insurance contract or a double-insurance contract concluded through fraud is treated as void.
Even where the policyholder has committed an act constituting insurance fraud, such as intentionally harming the insured or intentionally committing arson, the insurance company may not only refuse to pay the insurance proceeds but also cancel the insurance contract.
3. Insurance Fraud | Response Strategy
In insurance fraud cases, the initial statements and materials may affect the overall course of the case, so a careful response is required.
It can be important to organize the insurance claim process and the circumstances of the accident and to secure related documents.
Early Stage of the Investigation
If you are facing an investigation for insurance fraud, it is necessary to identify the key issues the investigative agency seeks to confirm and to accurately organize the facts relating to them.
At this stage, an organized position prepared for the investigation should be ready with respect to the circumstances before and after the insurance claim, the way the accident occurred, and the matters disclosed at the time of the contract.
In addition, if the insurance claim was not based on intentional deception but on legitimate grounds, it should be possible to systematically prepare and present supporting materials explaining this.
Because intent and willfulness are determined based on the overall circumstances, consistently organizing and submitting the relevant facts can have a positive effect on the subsequent proceedings.
Trial Stage
When a trial proceeds after indictment, a review of the legal issues relating to whether the Special Act on Prevention of Insurance Fraud has been violated is needed first.
The substance of the insured event, the circumstances at the time the insurance claim was made, the content and background of the relevant documents, and the purpose of obtaining the money must be organized comprehensively, and arguments must be constructed on that basis.
In the course of trial, whether there was intent as to the "deceptive act" and the "unjust enrichment" often becomes an issue, so if legitimate circumstances existed at the time the insurance contract was concluded and the insurance proceeds were received, one should be able to explain them in detail.
It is important to secure objective evidence of the actual occurrence of loss, along with related materials such as medical records, contracts, and receipts, and to convey them accurately to the court.
The attitude and degree of preparation at trial may also affect sentencing, so it is necessary to maintain a serious posture and manage the overall proceedings with care.
4. Insurance Fraud | When Responding Alone Is Difficult
As more people commit insurance fraud, insurers are also responding firmly, and it is being classified as a serious crime for which even first-time offenders may receive an actual custodial sentence.
In some cases, an actual custodial sentence has been imposed even where a settlement was reached with the affected insurer, so a prompt response is necessary.
This firm has many experienced criminal defense attorneys among its members, and identifies the key issues of each matter from the investigation stage through trial and presents a specific response strategy.
It also operates its own evidence examination and digital forensics center, allowing it to quickly analyze the authenticity of materials such as insurance claim documents, hospital records, and video evidence and to systematically organize a basis for effectively proving the client's position.
If you are involved in an insurance fraud matter and need help, you may request the assistance of a criminal defense attorney at any time.
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