(Re)in Summary
• Korea’s Financial Supervisory Service (FSS) uncovers insurance fraud ring involving brokers, hospitals, and fake patients, leading to 2.1bn won (approx. US$1.5m) in fraudulent claims.
• The scheme involved brokers recruiting fake patients, complicit doctors providing false records, and insurance planners aiding in policy enrolment.
• The case marks the first significant result of the FSS and Seoul Metropolitan Police Agency’s partnership to combat organised insurance fraud.
Korea’s Financial Supervisory Service (FSS) has helped to uncover an organized insurance fraud ring involving brokers, hospitals, and fake patients.
The ring resulted in fraudulent claims totalling 2.1 billion won (approx. US$1.5 million), reported the Korea Times.
According to the FSS, the fraud ring was orchestrated by a mastermind who set up a broker organisation that included gangsters and insurance planners.
The brokers recruited fake patients, who were then provided with false surgical records by complicit doctors. To make the claims appear legitimate, the fake patients inflicted wounds on themselves to simulate surgical scars.
Insurance planners also played a crucial role in the scheme by analysing the insurance coverage details for the recruited fake patients. They assisted these individuals in enrolling in additional insurance policies, thereby facilitating the submission of fraudulent insurance claims.
Two medical professionals involved in the operation used Telegram to share lists of fake patients with the brokers and received commissions based on their monthly performance.
The investigation revealed that the number of fake patients, including many criminal gang members, totalled around 260.
These individuals typically stayed at the hospital for brief periods, undergoing simple procedures like blood tests to obtain false medical records. Each fake patient claimed an average of 8 million won, resulting in a total of 2.1 billion won in fraudulent claims.
“Insurance fraud undermines the foundation of the country’s insurance system, as it leads to higher premiums for honest policyholders. The FSS will continue to actively collaborate with the police to root out insurance fraud,” the FSS said.
The FSS said the fraud scheme was first reported by its insurance fraud reporting centre earlier this year. Following an internal investigation, the FSS requested the Seoul Metropolitan Police Agency to conduct a detailed probe into the matter.
This case is the first significant outcome following the partnership agreement signed earlier this year between the FSS and the Seoul Metropolitan Police Agency aimed at eradicating organised insurance fraud involving brokers and hospitals.