Regulators Target Insurance Fraud With Tighter Screening and License Revocations (Image supported by ChatGPT)
SEOUL, Oct. 30 (Korea Bizwire) — South Korea’s financial authorities are moving to tighten oversight of insurance agents in an effort to curb their involvement in fraud, introducing measures that would mandate pre-screening and expand public disclosures of disciplinary records.
The Financial Services Commission said Wednesday it discussed the reforms during a meeting of the Insurance Investigation Council, which included health, police and pension agencies as well as industry associations.
Under the proposed rules, insurance companies and general agencies would be required to check the e-Clean System for any history of fraud-related disciplinary actions before hiring new agents. Regulators also plan to standardize disciplinary guidelines and expand disclosures on agents with prior fraud records.
The Financial Services Commission (FSC)
Officials said they would support legislation enabling the swift removal of licenses for agents convicted of fraud. Currently, administrative proceedings often lag behind court rulings, allowing unqualified individuals to continue selling policies.
Agents seeking to return to the industry after a fraud offense would be required to complete mandatory legal training.
Authorities pointed to signs that recent policy tools are working. Since revisions to the Special Act on Insurance Fraud took effect in August last year, online advertisements soliciting fraudulent claims have plummeted from hundreds per month to around 10. Investigative powers have also strengthened, with the Financial Supervisory Service referring 3,677 suspects linked to roughly 93.9 billion won (US$67 million) in fraud to police following five targeted probes.
In the auto insurance sector, 4,391 victims of fraudulent schemes received a total of 2.14 billion won in refunded surcharges between last year and June. To ensure more systematic refunds of dormant premium balances, insurers have been encouraged to contribute unused funds to the Korea Inclusive Finance Agency.
Officials said the council will continue public awareness campaigns and investigative cooperation to prevent fraud that drives up premiums for millions of policyholders.
M. H. Lee (mhlee@koreabizwire.com)
