FSS to reward best insurance fraud detection, prevention cases

A policyholder once filed a claim saying they had fallen and undergone surgery while traveling abroad. The paperwork looked clean. But when investigators reached out to local police and medical institutions for verification, they found a broker had orchestrated a fabricated accident.

The Financial Supervisory Service has decided to seek out and reward that kind of investigative know-how from the field. Insurance fraud has been growing more sophisticated, with schemes exploiting advances in medical technology becoming increasingly common.

The FSS announced Wednesday it is holding a "2026 Insurance Fraud Investigation Best Practices Contest" open to employees of insurance companies, loss adjustment firms and the Korea Post. Submissions will be accepted from Wednesday through Sept. 30.

The contest covers two categories: insurance fraud detection and fraud prevention activities. The overseas travel case cited above was an example the FSS offered when describing the detection category.

The detection category targets cases in which fraud was uncovered through creative techniques or inter-agency cooperation, as well as cases involving sophisticated or organized schemes. The FSS also cited a case in which a hospital director set up a medical institution with the intent to fraudulently collect indemnity insurance payouts, assembled a dedicated team to produce false diagnoses, and then colluded with patients to provide expensive cosmetic procedures before pocketing the insurance money. The prevention category covers cases involving the operation or improvement of systems, as well as internal and external awareness campaigns.

Participants should submit detailed descriptions of their entries by email. The FSS will select 10 winners through two rounds of judging — one top prize winner, three excellence winners and six encouragement winners. By category, six will be chosen from the detection track and three from the prevention track, with one overall top prize winner selected across both. The top prize winner will receive an award from the FSS governor, while excellence and encouragement winners will receive awards from their respective insurance association heads. All winners will also receive prize money.

One of the most common recent fraud schemes involves doctors issuing falsified medical records to make obesity drug prescriptions eligible for indemnity insurance coverage. The FSS said such methods exploiting advances in medical technology are on the rise.

The scale of insurance fraud is growing. Last year, the total amount detected reached 1.16 trillion won ($818 million), up 6.9 billion won from the previous year, while the number of people caught fell by 3,245 to 105,743. With the headcount declining even as the total amount rises, a clear trend has emerged toward larger individual cases.

The FSS expects that spreading know-how previously confined to individual organizations across the entire industry will raise the overall standard of investigative techniques, and that publicizing award-winning cases will heighten public awareness and deter potential fraud attempts.

Meanwhile, the FSS is also running a special insurance fraud reporting and reward period through Oct. 31. Those who report fraud can receive special rewards of up to 50 million won if they are affiliated with a hospital or clinic; up to 30 million won for brokers who tip off hospital-related fraud or employees of auto repair shops and car rental companies; and up to 10 million won for patients, vehicle owners, drivers or passengers who used medical institutions. Reports can be filed through the FSS call center or the insurance fraud reporting centers of individual insurers.