Insurance Fraud

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

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)

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)

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)

The institutions subject to the employment restriction are as follows.

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).

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.

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.

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.