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Deals & Cases

Violation of the Special Act on Prevention of Insurance Fraud

Special Act on Prevention of Insurance Fraud | A Client Who Escaped the Risk of Insurance Fraud Punishment, 'Not Booking the Case'

The client, who came to an insurance fraud attorney after being charged with a violation of the Special Act on Prevention of Insurance Fraud, was able to obtain a result of not booking the case through professional assistance from the early stages of the investigation.

CONTENTS
  • 1. Special Act on Prevention of Insurance Fraud | The Client's Story
    • - The Special Act on Prevention of Insurance Fraud as Explained by an Attorney
  • 2. Special Act on Prevention of Insurance Fraud | The Attorney's Argument and Assistance
    • - Asserting That There Was No Intent to Commit Insurance Fraud from the Outset
    • - Requesting Leniency Through the Position of the Client's Mother
  • 3. Special Act on Prevention of Insurance Fraud | The Result Is Not Booking the Case
  • 4. Special Act on Prevention of Insurance Fraud | Points to Note

1. Special Act on Prevention of Insurance Fraud | The Client's Story

Special Act on Prevention of Insurance Fraud insurance fraud investigation insurance fraud conspiracy insurance fraud no suspicion level of punishment for fraud


The client who inquired about the Special Act on Prevention of Insurance Fraud was suffering from Parkinson's disease and had difficulty communicating directly, so the client came to this law firm together with the client's mother and requested a consultation.

The client had been diagnosed with Parkinson's disease at a hospital about 15 years earlier and subscribed to accident and illness insurance in the year following the diagnosis.

At the time, the insurance planner proceeded with the subscription at a rapid pace and gave guidance to the effect that there was "no problem," and the contract was in fact concluded normally.

However, the insurance company recently raised, all of a sudden, a violation of the duty of disclosure prior to the contract and reported the client on the charge of violating the Special Act on Prevention of Insurance Fraud.

The Special Act on Prevention of Insurance Fraud as Explained by an Attorney

The Special Act on Prevention of Insurance Fraud is a special act enacted to prevent and regulate the act of wrongfully receiving insurance proceeds.

A charge may be recognized where an insured person claims insurance proceeds with false or exaggerated information, intentionally causes or disguises an insured event to wrongfully receive insurance proceeds, or exaggerates the damage from an insured event to make an excessive claim for insurance proceeds.

Where insurance fraud is recognized, the punishment is imprisonment for not more than ten years or a fine not exceeding 50 million won.

If insurance fraud has been committed habitually, the sentence may be aggravated by up to one half.

In addition, as shown below, where the amount of profit obtained through the act of insurance fraud is five hundred million won or more, the offender becomes subject to aggravated punishment under Article 11 of the Special Act on Prevention of Insurance Fraud as follows.

Category

Applicable Standard

Level of Punishment

Basic Punishment

Where insurance proceeds are wrongfully obtained through an act of insurance fraud or a third party is caused to obtain themImprisonment for not more than 10 years or a fine not exceeding 50 million won

Aggravated Punishment

Where the total amount of wrongfully obtained insurance proceeds (the insurance fraud profit) is five hundred million won or more but less than five billion wonImprisonment for at least 3 years
Where the insurance fraud profit is five billion won or moreImprisonment for at least 5 years or life imprisonment


Where a person becomes subject to aggravated punishment, the Act on Aggravated Punishment of Specific Economic Crimes applies pursuant to Article 16 of the Special Act on Prevention of Insurance Fraud, and employment as an officer or employee of an insurance company or a financial company may also be restricted.

2. Special Act on Prevention of Insurance Fraud | The Attorney's Argument and Assistance

After listening to the account of the client and the client's mother, the attorney kept in mind that, in determining insurance fraud, the key criterion is whether 'there was an intent to commit insurance fraud from the outset,' and placed emphasis on the statements made at the early stage of the investigation.

The attorney established a response strategy focused on the point that the client had no intent to commit insurance fraud.

In particular, the attorney comprehensively organized the circumstances of the insurance subscription, the state of the client's health at the time, and the content of the planner's explanation, and emphasized that the client could not be a subject of punishment under the Special Act on Prevention of Insurance Fraud.

Asserting That There Was No Intent to Commit Insurance Fraud from the Outset

The attorney actively demonstrated that the client was of a young age at the time of subscribing to the insurance and that, even after the diagnosis of Parkinson's disease, the client was in a condition able to carry on daily life while also taking part in a sports club.

The attorney specifically explained that the substantial worsening of symptoms occurred several years after subscribing to the insurance, and that the client had not recognized the seriousness of the disease at the time.

Requesting Leniency Through the Position of the Client's Mother

The attorney paid particular attention to the point that the role of the client's mother was important in this case.

On behalf of the client, who was a student in the client's early twenties, the insurance contract was mainly handled by the mother, and the attorney emphasized that the planner's explanation during the consultation at the time had been hurried and insufficient.

The attorney pleaded that the mother had answered faithfully during the telephone consultation, and that, as the insurance had consequently been maintained for 15 years, there had been no intent to intentionally commit insurance fraud.

3. Special Act on Prevention of Insurance Fraud | The Result Is Not Booking the Case

After examining the defense counsel's written opinion and materials, the investigative agency determined that it was difficult to recognize a violation of the Special Act on Prevention of Insurance Fraud and processed the matter as 'not booking the case' on the ground of no suspicion of crime.

Not booking the case means a disposition in which the police conclude a case at the stage before booking, after the case has been received.

Unlike a non-referral decision, in which a suspect is booked and investigated and then, upon a determination that there is no suspicion, the case is not referred to the prosecution, in the case of not booking the case no investigation is conducted with the status of a suspect, and the matter is not formally registered as a criminal case.

Because the criminal procedure itself did not begin, the matter was concluded with a swift closing process.

The client is currently in a condition of being hospitalized at a convalescent hospital after receiving a disability determination, and the point that the client has neither the ability nor the intent to defraud insurance proceeds was also taken into account.

As the case was concluded with not booking the case, the client was able to escape the risk of criminal punishment.

4. Special Act on Prevention of Insurance Fraud | Points to Note

In insurance fraud cases, the mere raising of an issue by the insurance company may, if not adequately addressed, lead to criminal proceedings, so particular caution is required.

The content of the disclosure at the time of the insurance subscription, the consultation process, and whether the planner provided guidance all become important factors in the determination.

In a situation where punishment for insurance fraud is feared, rather than responding alone, it is more important than anything else to receive the assistance of an attorney from the early stages and to respond strategically.

Daeryun, the ninth-ranked law firm in the Republic of Korea (based on the 2025 National Tax Service value-added tax filings), on the basis of its experience with various cases related to insurance fraud, presents solutions suited to each client's situation.

If you have been implicated in a case related to insurance fraud, as in the client's case, please consult with a professional through a 🔗legal consultation reservation.

보험사기방지특별법 | 보험사기 처벌 위기에서 벗어난 의뢰인 ‘불입건’

This content is based on actual case studies of Daeryun Law LLC with some adaptations, and the copyright belongs to our firm.
Unauthorized reproduction, duplication, or distribution and other copyright infringements may result in legal action under applicable laws.

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