Insurance is an economic institution designed to protect people from various forms of unexpected risks which may arise in the course of their living. Insurance covers future risks that can happen to anyone, but of which victims have not been ascertained. As people began to feel its importance in their lives, insurance has come to play a highly significant role in people’s living, as evidenced by the spread of legally mandated insurances such as health insurance, employment insurance, workers’ compensation and auto insurance.
Insurance, however, also gave rise to adverse effects in the form of insurance crimes: instead of seeking economic stability through insurance, some citizens seek unjustified enrichment through insurance accidents. Such crime often goes beyond the level of individual profit-seeking through insurance accidents, to take the form of specialized and organized crimes. Insurance crimes adversely affect the entire institution because they undermine the people’s trust in insurance. Trust in insurance is a social value of great importance in today’s society, in that it functions as a safety net for today’s society suffering from a wide variety of unexpected accidents. In this context, crimes that breach the society’s trust pose a grave issue.
The term ‘insurance crime’ covers various types of crime, from felonices such as homicide and arson committed for the purpose of gaining insurance benefits, to a violation of the insurer’s duty to inform a client. An increasing number of people share the position that insurance crimes committed for the purpose of gaining insurance benefits pose a more serious threat to the fundamental order of the society than fraud, and therefore need to be dealt with more severly: in other words, those who kill or injure others seeking insurance benefits should be subject to more severe punishments. To the contrary, people also share a rather tolerant attitude towards small insurance crimes and its punishability under the law. Some regard small insurance crimes－exaggerating damage, violating the duty to inform, and switching drivers－as trivial, and do not take it seriously when they or their neighbors manipulate the insurance system. All of these elements add to the confusion around people’s perception of insurance crimes. On another note, not a small number of people are critical of insurance companies and their behaviors: for example, some of them use lawsuits as a means to avoid paying insurance benefits.
A wide range of measures are required to prevent insurance crimes. First, a person needs to be stopped if he/she intends to purchase an insurance policy with a criminal intent. To achieve this, groups that posee risks of insurance crimes need to be controlled. It is becoming increasingly imperative to prevent insurance crimes by collecting and using financial and health insurance information to identify suspects and prevent insurance crimes in advance. Such measure, however, would run the risk of exposing personal information. A system needs to be established to prevent leakage, along with imposing stricter sentences on those who leak personal information. In addition, as is the case with banks and loan customers, policyholders need to be asked whether they consent to having their personal information available for viewing. In addition, when sharing such information, the viewing records must be kept. Rather than focusing only on how many insurance policies they sold, insurance companies need to share information on policyholders so that they can refuse to acquire an insurance policy with previously identified issues. Such measures will help preventing damage caused by insurance accidents, and eliminating the temptation to commit insurance crimes in the first place, ultimately contributing to the sound growth of the institution.
In order to raise people’s awareness on insurance crimes, those crimes need to be defined as a separate category of crime with unique elements under the relevant laws. Insurance crimes can be grouped into a separate category because they commonly violate a distinct interest protected under the law: ‘social trust in the insurance institution.’ Considering the economic and social impact of insurance crimes, those crime should be categorized in terms of types of actions and provided for under the Criminal Act and other special Acts, if we are to accurately identify the current situation and compe up with ways to deal with them.
Also requiring response are structural insurance crimes, such as excessive medical treatments by medical practitioners and false insurance claims from auto repair technicians. To prevent these types of crimes, we need to establish standard treatments and repair service fees across different diseases or repair types, enhance periodical supervision activities on hospitals and repair shops, and carry out more extensive PR activities to raise people’s awareness that false claim, excessive treatment, solicitation based on false information, and aiding and abetting thereof constitute crimes.
The sentencing issue often raised in insurance crime cases stem from the fact that the level of punishment for insurance crimes is markedly lower than other types of crime. Most criminals charged with insurance crimes are sentenced to fines or suspended imprisonment, which is far lower than sentences against criminals who commit fraud, a crime quite similar to the former. Such issue cannot be addressed by increasing the legally prescribed punishments: resolving such issue requires raising the society’s awareness on the problems associated with insurance crimes.
In that insurance crimes are committed in pursuit of financial gain, they can snugly fit into the category of ‘insurance fraud,’ as the current laws recognize them. Today, however, insurance crimes cannot be reduced to a crime against an individual interest, as they have expanded beyond the traditional boundaries of fraud to victimize insurance companies, insurance corporations, policyholders and the people in general, and incapacitate the insurance institution, a system capable of distributing the risks inherent to the modern society in the most efficient manner. In this sense, insurance crimes can be characterized as economic/social crimes.
The government and the insurance industry should join their efforts to prevent and investigate insurance crimes in the sense described above. While the government is responsible for preventing crimes and punishing criminals, it is the insurance companies who hold the most extensive data on such crimes. Therefore, cooperation with the insurance industry is essential in order to identify criminal behaviors and subject each of them to appropriate sanctions, be it punishment or forfeiture of unjustly gained profits, and thereby rid the society of any attempt to gain profit through crimes. Collecting the relevant data based on a specialized investigation system will ensure efficient investigation into insurance fraud cases.
Insurance crimes manipulate the characteristics of insurance. Insurance crimes must be stopped, and the resulting leakage of insurance benefits prevented, if we are to protect the other good-willed policyholders and prevent the increase of insurance premiums for potential policyholders. On the other hand, investigation of insurance fraud may inconvenience insurance consumers. Wisdom is required to minimize inconveniencing policyholders while preventing insurance frauds, and harmony is required between preventing prevention insurance frauds and protecting policyholders.