South Korea’s insurance sector detected 620 billion won in fraudulent claims in the first half of 2026 – and the breakdown of those figures points to a growing problem in the lines that agents and planners sell most.
The Financial Supervisory Service (FSS) reported on September 28 that the figure represented a 9.1% increase from the same period a year earlier. The number of individuals caught rose 5.6% to 53,865.
The first-half result continues a multi-year pattern with no reversal in sight.
Full-year detected fraud stood at 1.08 trillion won in 2022, climbing to 1.12 trillion won in 2023 and 1.15 trillion won in 2024, according to the Korea Times. The 2025 full-year figure reached a record 1.16 trillion won, with 105,743 individuals caught – data the Herald Business reported citing the FSS directly in September.
For context, the Korea Insurance Research Institute projected total Korean insurance premiums at around 254.7 trillion won for 2025. Detected fraud, while a fraction of that figure, has grown in each of the past four years.
Read next: Korea’s auto underwriting loss exposes a gap in fleet motor pricing
Auto insurance remained the single largest source of detected fraud by value in H1 2026, at 288 billion won, or 46.5% of the total.
But the more telling figure is in long-term insurance – the category covering health, disability, and savings-linked products. That segment accounted for 264.5 billion won, or 42.7% of the detected total, and posted the largest absolute year-on-year rise of any product line: up 34.3 billion won from the prior-year period.
Long-term non-life products are among the most actively distributed lines in Korea’s agency channel. Fraud concentrating there means claims scrutiny is tightening in the lines generating the most commission income – and the regulator is already acting on it.
The profile of individuals detected covers a wide demographic spread.
By age, those in their 60s formed the largest cohort at 13,247 individuals, or 24.6% of total cases, followed by those in their 50s at 12,259 (22.8%), 40s at 9,619 (17.8%), and 30s at 8,399 (15.6%).
By occupation, office workers made up the largest group at 14,656 people, or 27.2% of the total. Full-time homemakers followed at 5,855 (10.9%), the unemployed and day labourers at 4,942 (9.2%), and motor transport workers at 2,246 (4.2%).
By fraud type, manipulation of accident details – including overclaiming of benefits – accounted for 379.8 billion won, or 61.3% of the detected total. Fabricated accidents came in at 108.1 billion won (17.4%), with intentional accidents at 86.4 billion won (13.9%).
The most commercially significant development in the FSS data release is not a statistic – it is a legislative change that takes effect in March next year.
A revision to the Insurance Business Act has cleared the National Assembly establishing statutory grounds to remove insurance planners from the market immediately upon a finding of fraud. Previously, no such mechanism existed in statute. Under the amendment, a planner’s registration is cancelled without the standard investigation, sanctions, or hearing procedures that would otherwise apply.
For agencies and brokerages contracting planners – particularly in long-term non-life lines, where fraud is growing fastest – the question is now operational: what monitoring is in place to identify fraudulent claims activity before the regulator does?
Read next: Minor injury claims have cost South Korea’s auto market dearly
The FSS has moved beyond enforcement actions to build institutional infrastructure targeting hospital-led fraud.
On September 16, FSS governor Lee Chan-jin and Health Insurance Review and Assessment Service (HIRA) president Hong Seung-kwon signed a memorandum of understanding linking their respective claims and review data across indemnity and auto insurance lines, the Herald Business reported. The MOU covers joint detection of excessive treatment, coordinated referrals of suspected fraudulent hospitals for investigation, and personnel exchanges.
In announcing the agreement, FSS governor Lee said the regulator would “maximize synergies between our agencies by actively sharing information with HIRA, which works to promote appropriate medical care, and jointly responding to red flags such as excessive non-covered treatment under indemnity insurance.”
He added that for medical institutions suspected of fraudulent auto insurance billing, the FSS would “closely examine the possibility of insurance fraud and, when grounds are found, promptly refer them for investigation.”
The FSS also confirmed it will activate a fast-track mechanism enabling cooperation with the Korean National Police Agency from the outset of its own investigations, shortening the window between detection and formal prosecution.
Taken together – rising fraud values, accelerating long-term insurance losses, a new statutory planner removal mechanism, and a tighter inter-agency detection framework – the compliance environment for Korea’s insurance distribution sector is shifting materially heading into 2027.
