FSS cites 881 insurance frauds

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FSS cites 881 insurance frauds

In August, a driver parking in an alley in Hwacheon County, Gangwon, accidently scratched his car. When he took it to his neighborhood repair shop, the employee said the car can be fixed for free. All the driver needed to do was call the insurance company and tell them that some unknown person damaged the car when it was parked in an alley overnight.

The driver did as he was told four days later and the insurance company concluded that the damage was caused by a perpetrator without any witnesses. An additional claim was also made on account of crashing the car into an obstacle. The repair shop received 1.48 million won ($1,255) for a paint job.

From January 2015 to May 2016, the same repair shop made similar suggestions to 18 drivers and made claims, from which it was able to collect 4.4 million won in insurance payments.

In February 2015, a driver in Changwon, South Gyeongsang, bumped into a pole while parking and suffered a slight scratch on the right corner of the car. However, the driver claimed that car was damaged four times from February to December 2015 and made repairs on all four damages in February of this year. The insurance company paid 1.93 million won for a paint job. However, it turned out that the initial scratch on February last year was the only repair needed and the other three cases were false.

It wasn’t only individuals who committed such fraud. A company that owned 16 vehicles made two to three scratches on the company-owned vehicles and claimed they were committed by an unknown perpetrator. The company was able to collect 21 million won from the insurance company.

These were just a few examples of the insurance fraud that the Financial Supervisory Service discovered in the last year. The FSS said Monday it found 881 people who have committed similar fraud involving false damages claims and collected 1.86 billion won.

The FSS said it studied the cases of 9,584 drivers suspected of fraud after motorists claimed more than twice that their car had been damaged between January 2015 and May 2016.

According to the financial authority, insurance companies don’t usually conduct field investigations on fender-benders and it is difficult to prove the cases were staged.

The frauds were usually committed on the suggestion of the repair shop. The repair shop would tell the driver that they would cover the part of the repair charge not covered by insurance. The repair shop then overcharges the insurance company on the actual damage. For example, even if they only need to cover up a small part of the vehicle where the paint was peeled off, the repair shop will do an overall body paint and charge the insurance company for it.

“When a repair shop says that they could get an overall paint job for free, the possibility that it is an insurance fraud is high,” said an FSS official. “It is best not to follow such suggestions and report them to the FSS insurance crime report center.”


BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]

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