Last Year's Insurance Fraud Hit 9 Trillion Won... Government to Establish AI Insurance Fraud Prevention System by September

Record 1.16 Trillion Won in Detected Fraud Last Year

Undetected Losses Estimated at 9 Trillion Won

AI-Powered Forgery Detection: "Preventing Premium Increases and Health Insurance Fund Leakage"

The government will establish a plan for building an artificial intelligence (AI)-based insurance fraud prevention platform by September 2026. Although the amount of detected insurance fraud last year reached a record high of 1.16 trillion won, it is estimated that the undetected amount could total around 9 trillion won, prompting a full-scale response. At a pan-government level, the government aims to introduce measures such as utilizing AI to detect forged and altered documents, and sharing information on suspected collusion among conspirators, to prevent organized insurance fraud. The goal is to protect honest policyholders from insurance payout leakage and prevent the deterioration of the national health insurance fund.

Insurance Fraud Losses Could Top 9 Trillion Won: "Main Cause of Premium Increases and Health Insurance Fund Leakage"

The Financial Services Commission (FSC) announced that under the direction of Kim Jinhong, Director General of the Financial Industry Bureau, it held the kickoff meeting for the "AI-Based Insurance Fraud Prevention System Task Force (TF)" and the "Insurance Investigation Council" on June 4, 2026. Participants included the FSC, the National Police Agency (government), the Financial Supervisory Service, the National Health Insurance Service, the Health Insurance Review & Assessment Service (related agencies), the Korea Life Insurance Association, the General Insurance Association of Korea, and the Korea Insurance Research Institute (industry and private sector).

According to the FSC, the amount of detected fraud in private insurance reached a record 1.1571 trillion won last year. When including undetected fraud, the total is estimated to be around 9 trillion won. By insurance type, long-term non-life insurance—which includes indemnity health insurance and health insurance—accounted for 44.7%, followed by auto insurance at 22.4%, life insurance at 21.8%, and general non-life insurance at 11.2%.

An FSC official explained, "Such leakage of insurance payouts leads to higher premiums, and when insurance fraud involves claims for health insurance benefits, concerns rise about the depletion of the health insurance fund."

New Types of AI-Driven Insurance Fraud on the Rise: Joint Response by Government and Related Agencies Essential

The TF assessed that insurance fraud techniques are becoming increasingly sophisticated as AI spreads. There is rapid evolution toward large-scale, organized, and intelligent fraud schemes involving collusion among medical institutions, auto repair shops, brokers, and agents. In particular, new types of insurance fraud that exploit generative AI and deepfake technologies are on the rise.

With AI, it is easy to forge or alter necessary documents such as IDs, medical certificates, and photos of vehicle damage using just a smartphone throughout the entire process of signing up for insurance, handling claims, and requesting payouts. When receipts and medical records are manipulated with generative AI, clues such as font type and spacing disappear as image pixels are newly created, making detection difficult. Additionally, repeatedly printing, outputting, and re-photographing files makes tampering even harder to detect.

The problem is that a sufficient collaborative system between government agencies and related organizations has not yet been established. There is a lack of organic synergy between financial sector organizations such as the Korea Credit Information Services, the Korea Insurance Development Institute, and insurance companies, and welfare agencies such as the National Health Insurance Service and Health Insurance Review & Assessment Service. In particular, the cross-verification infrastructure needed to compare and verify data held by the National Health Insurance Service and Health Insurance Review & Assessment Service—which is essential for effectively countering AI-driven forgery and alteration—remains inadequate.

Government to Launch Pan-Government AI Insurance Fraud Prevention Platform in September

The government has formed a TF composed of related ministries, agencies, industry stakeholders, and private experts. For efficient operation, the TF is divided into three subcommittees: legal and institutional affairs, data, and infrastructure.

Based on the principle of "countering AI crime with AI," the TF plans to advance the insurance fraud prevention platform. While implementing traditional fraud detection methods such as original document comparison, the TF has also established the principle of not infringing upon policyholders' rights, including privacy protection.

Each subcommittee will discuss key tasks in their respective fields, including: establishing legal grounds for centralized insurance fraud data collection and sharing; selecting additional data for focused detection and sharing; enabling real-time information-sharing between the insurance sector and related agencies; and developing AI-based fraud pattern analysis and risk indices.

The FSC plans to operate the TF for the next three months and to establish the "Plan for Building an AI-Based Insurance Fraud Prevention System" by September. From October, the government intends to rapidly push forward follow-up measures such as amending relevant laws and upgrading the platform.

Director Kim stated, "Once the AI-based insurance fraud prevention system is established and fully utilized, it will enable comprehensive response measures such as preemptive prevention, real-time detection, and post-fraud action, thereby reducing insurance fraud across the board. This is expected to enhance trust in the insurance industry, ultimately reduce premiums, and prevent leakage from the health insurance fund, delivering benefits back to the public."

This content was produced with the assistance of AI translation services.