According to sources close to the auto industry, the first suspected fraudulent car insurance claim was filed in July of last year. (Image: Kobiz Media)
SEOUL, Mar. 2 (Korea Bizwire) — Experts have warned electric cars could be a new target of insurance fraud due to subsidies provided by the government.
According to sources close to the auto industry, the first suspected fraudulent car insurance claim was filed in July of last year.
The claimant argued an electric car parked by the shore at low tide in South Gyeongsang Province was submerged and a complete write-off.
However, the major insurance company dealing with the accident began doubting the story after the claimant’s statements didn’t add up.
Speculation grew further after the fact came to light that the client was an automobile expert working at a car dealership.
The case was eventually identified as insurance fraud in a police investigation, during which witnesses came forward saying the driver knowingly moved the vehicle towards the water.
Buyers of electric cars are eligible for up to 12 million in subsidies from the central government, as well as an addition 4.4 million to 11 million from local governments.
The swindler who made costly insurance claims was found to have received 17 million won in government subsidies to cover nearly half of the price of the electric car, which was 37 million won.
The scam artist could have got received up to 35 million won through a property damage claim, netting around 15 million won in illicit profits.
Experts have warned electric cars could be a new target of insurance fraud due to subsidies provided by the government. (Image: Yonhap)
Insurance experts say electric car drivers are more likely to give in to temptation, as used electric cars are priced lower than those with gasoline engines.
Currently drivers who wish to scrap their electric cars soon after purchase are obliged to pay back the government subsidies from their insurance payout.
Experts warn, however, that swindlers can take advantage of loopholes in the government’s current renewable energy car policy, as local authorities lack the capacity to background check each and every vehicle to be scrapped.
Drivers are no longer obliged to return government subsidies after two years, leaving room for insurance fraud.
“We are in urgent need of countermeasures as more electric car drivers could be tempted to engage in fraud involving government subsidies,” an industry official said.
Ashley Song (ashley@koreabizwire.com)
