Mr. A had his car serviced at an auto repair shop after being rear-ended by another vehicle while driving through an intersection. The representative from the repair shop suggested taking this opportunity to apply a new glass coating and offered to issue a false warranty for the glass coating to facilitate the insurance claim. Mr. A attached the false warranty he received from the shop and claimed the cost of repairs, which included the coating expense, to the insurance company and received payment.
False and duplicate claims related to auto repair expenses are rampant. The Financial Supervisory Service noted that filing false or duplicate claims for repair costs is highly likely to be considered insurance fraud, urging insurance policyholders to remain vigilant and not to succumb to temptation.
According to the FSS on the 20th, the amount of false claims for auto insurance, including duplicate claims related to repair costs, was 208.7 billion won last year. It rose from 156 billion won in 2022 to 196.1 billion won in 2023, showing an increasing trend each year. In particular, the amount of exaggerated claims from repair shops that included false claims for glass coating, like Mr. A's, amounted to 8 billion won over the past year.
The FSS warned that if one is lured by recommendations from auto repair shops to file false or exaggerated claims for repairs on accident vehicles, they could become involved in insurance fraud. Auto insurance fraud is a violation of the Insurance Fraud Prevention Act, which can result in up to 10 years in prison or fines of up to 50 million won. If forgery of documents, such as preparing false warranties, is recognized in the process, penalties could include a maximum of 5 years in prison or fines of up to 10 million won. The FSS stated, "Offers of manipulating incidents by issuing false documents unrelated to traffic accidents should be firmly rejected."
It is likely to be recognized as insurance fraud if one receives compensation for damages from a previous accident and does not repair the vehicle, then creates the impression that existing damages are new when another accident occurs, thus receiving double compensation.
Duplicate claims for damaged personal belongings due to a car accident can also be considered insurance fraud. This method involves claiming insurance for personal items like a mobile phone that are already damaged, as if they were damaged in a traffic accident. The FSS noted, "Insurance fraud incentives or recommendations to request compensation for items that have already been compensated by someone else should be firmly rejected."
Abusing the vehicle performance and condition inspection liability insurance can also lead to penalties. A typical case involves knowingly stating that a vehicle is in good condition on paper, despite being aware of its defects, and making it seem as if the defects occurred after the sale. This enables one to claim and receive insurance funds, repair the existing defects, and then resell the vehicle for a higher price than it was purchased.
The FSS stated, "We will continuously uncover cases of consumer damage and cautions concerning types of insurance fraud that are likely to involve high risks for insurance consumers, while actively collaborating with the Traffic Accident Compensation Supervisory Service (TACSS) to address new forms of auto insurance fraud. We will strengthen planned investigations into organized auto insurance fraud to eradicate crimes that infringe on public welfare."