If the Penalty for Insurance Fraud, Now Lighter Than for Fraud Under the Criminal Act, Is Raised, Where Do the Aggravated Penalties for Habitual Offenders and Self-Inflicted Harm Extortion Fit: Four Questions on Two Special Act on Prevention of Insurance Fraud Amendment Bills

The Materials Read and Their Stage

This piece examines two bills introduced by members of the National Assembly. Bill No. 2218171 was introduced by Yoo Dong-soo and nine other members on April 8, 2026 at the 434th Session of the National Assembly (extraordinary session), and Bill No. 2219016 was introduced by Park Dae-chul and nine other members on May 19 at the 435th Session of the National Assembly (extraordinary session). Both bills are under the jurisdiction of the National Policy Committee.

The National Assembly progress table records Bill No. 2218171 as referred to the committee on April 9 and as placed on the agenda of the 2nd full committee meeting of the 438th Session of the National Assembly (extraordinary session) and referred to a subcommittee on August 26. For Bill No. 2219016, the table records referral on May 20, placement on the agenda of the same full committee meeting and referral to a subcommittee on August 26, and placement on the agenda of the 2nd subcommittee meeting of the 439th Session of the National Assembly (regular session) on September 15. The meeting-results column for the August 26 full committee meeting shows a review report, but this piece has not read the review report or the minutes.

The reasons for the proposal and the main contents shown on each page were read, together with the reasons for the proposal, the text of the amendment, the Addenda and the comparison table of current and proposed provisions in the PDF of the original text of each bill. Other bills amending the same Act (for example, Bill No. 2209149 and Bill No. 2203586, which appear in the National Assembly legislative status search list) were not opened or read.

Sources for this section: National Participatory Legislation Center, National Assembly Legislative Status: Partial Amendment Bill to the Special Act on Prevention of Insurance Fraud (Bill No. 2218171, Yoo Dong-soo and nine other members) · National Participatory Legislation Center, National Assembly Legislative Status: Partial Amendment Bill to the Special Act on Prevention of Insurance Fraud (Bill No. 2219016, Park Dae-chul and nine other members)

Penalties Under the Current Special Act on Prevention of Insurance Fraud and the Criminal Act

Article 2, subparagraph 1 of the current Special Act on Prevention of Insurance Fraud (Act No. 21066, in force October 1, 2025) defines an act of insurance fraud as an act of claiming insurance money by deceiving an insurer as to the occurrence, cause or particulars of an insured event. Article 3 provides that, with respect to the punishment of persons who commit insurance fraud, this Act applies in preference to other Acts. Article 8(1) punishes, by imprisonment with labour for not more than 10 years or a fine not exceeding KRW 50 million, a person who obtains insurance money, or causes a third party to obtain it, by an act of insurance fraud (subparagraph 1) and a person who, in violation of Article 5-2, arranges, induces, solicits or advertises an act of insurance fraud (subparagraph 2); Article 8(2) permits imprisonment and a fine to be imposed concurrently in the case of subparagraph 1.

Article 9 aggravates, by up to one half of the penalty prescribed for the offence, the punishment of a person who habitually commits an offence under Article 8. Read as raising the maximum term and the maximum amount by up to one half, the current ceiling for habitual insurance fraud becomes 15 years' imprisonment with labour and a fine of KRW 75 million. Article 10 punishes attempts of the offences under Articles 8 and 9. Article 11(1) aggravates the punishment of a person who has committed an offence under Article 8 or 9 to life imprisonment or imprisonment with labour for not less than five years where the profit gained from insurance fraud is KRW 5 billion or more, and to imprisonment with labour for a limited term of not less than three years where it is KRW 500 million or more but less than KRW 5 billion; Article 11(2) permits a fine not exceeding the amount of the profit to be imposed concurrently in such cases.

Article 347(1) of the Criminal Act as at the reference date (Act No. 22007, in force October 2, 2026) prescribes for fraud imprisonment with labour for not more than 20 years or a fine not exceeding KRW 50 million, and bears an amendment notation dated December 23, 2025. Extortion under Article 350 carries imprisonment with labour for not more than 10 years or a fine not exceeding KRW 20 million, and Article 351 aggravates the punishment of habitual fraud and habitual extortion by up to one half. Article 42 sets imprisonment for a limited term at not more than 30 years, but up to 50 years where the punishment is aggravated. Article 3(1) of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes aggravates the punishment for fraud, extortion and their habitual forms, among others, under the Criminal Act where the profit is KRW 500 million or more, using the same bands as Article 11(1) of the Special Act on Prevention of Insurance Fraud; Article 8 of the Special Act on Prevention of Insurance Fraud does not appear in that list.

Accordingly, as at the reference date, where an act of deceiving an insurance company and receiving insurance money is punished under Article 8 of this Act by virtue of Article 3, the ceiling for imprisonment is 10 years, whereas an act of receiving another person's property by the same deception is subject to a ceiling of 20 years under Article 347 of the Criminal Act. It is this reversal that the reasons for the proposal of Bill No. 2218171 take issue with.

Sources for this section: Korean Law Information Center, current Special Act on Prevention of Insurance Fraud (Act No. 21066, in force October 1, 2025) · Korean Law Information Center, current Criminal Act (Act No. 22007, in force October 2, 2026) · Korean Law Information Center, current Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Act No. 15256, in force March 20, 2018)

What the Two Bills Would Change

Bill No. 2218171 changes "10 years" to "20 years" and "KRW 50 million" to "KRW 70 million" in the part of Article 8(1) other than its subparagraphs. The reasons for the proposal explain that, when the Act was enacted in 2016, the insurance fraud offence was made more severe than fraud under the Criminal Act as it then stood (described in the reasons for the proposal as imprisonment with labour for not more than 10 years or KRW 20 million), but that, with the December 2025 amendment of the Criminal Act raising fraud to 20 years' imprisonment and a fine of KRW 50 million, the insurance fraud offence has instead become the lighter one. The reasons therefore state that imprisonment is raised to not more than 20 years, corresponding to the amended Criminal Act, and the fine to KRW 70 million.

Bill No. 2219016 inserts a new paragraph (2) into Article 11 so that a person who habitually commits an offence under Article 8 by means of extorting a person through self-inflicted harm is punished by imprisonment with labour for not more than 15 years; it moves the former paragraph (2) to paragraph (3) and extends the concurrent imposition of a fine to the cases under paragraphs (1) and (2). The reasons for the proposal explain that, unless the profit is KRW 500 million or more, a fine is not excluded, leaving room for courts to impose a fine in consideration of circumstances such as financial hardship, and that habitual extortion through self-inflicted harm using motor vehicle accidents is a serious crime that endangers the life and body of drivers and pedestrians.

The Addenda of both bills propose that the Act enter into force on the date on which six months have elapsed after its promulgation, and neither contains application provisions or transitional measures. Neither bill refers to the other.

Sources for this section: National Participatory Legislation Center, National Assembly Legislative Status: Partial Amendment Bill to the Special Act on Prevention of Insurance Fraud (Bill No. 2218171, Yoo Dong-soo and nine other members) · National Participatory Legislation Center, National Assembly Legislative Status: Partial Amendment Bill to the Special Act on Prevention of Insurance Fraud (Bill No. 2219016, Park Dae-chul and nine other members) · Korean Law Information Center, current Special Act on Prevention of Insurance Fraud (Act No. 21066, in force October 1, 2025)

On What Basis Is the Fine Ceiling Set at KRW 70 Million, Above the Criminal Act, and Arranging and Advertising Raised to 20 Years as Well?

Bill No. 2218171 aligns imprisonment with the 20 years prescribed for fraud under the Criminal Act, while setting the fine at KRW 70 million, higher than the KRW 50 million under the Criminal Act. The reasons for the proposal give no separate basis for the figure of KRW 70 million. The bill does not reveal whether the intention is to make the special Act appear heavier than the Criminal Act, as at the time of enactment, or to align the fine with those for other finance-related offences.

Because the text of the amendment alters the part of Article 8(1) other than its subparagraphs, not only the obtaining of insurance money under subparagraph 1 but also the arranging, inducing, soliciting and advertising under subparagraph 2 are raised to the same 20 years and KRW 70 million. Subparagraph 2 covers conduct that is complete even if no insurance money is actually obtained, yet the reasons for the proposal explain only the reversal relative to fraud under the Criminal Act and do not explain why the penalty under subparagraph 2 is raised as well. Article 347 of the Criminal Act contains no provision separately punishing the mere arranging or advertising of fraud.

If comparison with the Criminal Act is the basis for the amendment, is it appropriate to raise subparagraph 1, which has a counterpart for comparison, and subparagraph 2, which has none, to the same penalty? On what basis is the fine ceiling set KRW 20 million higher than under the Criminal Act?

Sources for this section: National Participatory Legislation Center, National Assembly Legislative Status: Partial Amendment Bill to the Special Act on Prevention of Insurance Fraud (Bill No. 2218171, Yoo Dong-soo and nine other members) · Korean Law Information Center, current Special Act on Prevention of Insurance Fraud (Act No. 21066, in force October 1, 2025) · Korean Law Information Center, current Criminal Act (Act No. 22007, in force October 2, 2026)

If Both Bills Pass, Will the Ceiling for Habitual Insurance Fraud by Extortion Through Self-Inflicted Harm Fall Below That for Other Habitual Insurance Fraud?

This piece reads the 15 years in Bill No. 2219016 as a figure set by reference to the 10 years under the current Article 8. The reasons for the proposal give no separate basis for the 15 years. Since the ceiling for imprisonment for habitual insurance fraud is already 15 years under the current Article 9, if only this bill is added to the present law, what the new Article 11(2) changes is not the ceiling but the closing of the route by which only a fine may be imposed. The explanation in the reasons for the proposal is likewise directed at excluding fines.

If, however, Bill No. 2218171 also passes and Article 8 becomes 20 years, habitual insurance fraud under Article 9 rises to as much as 30 years. The 15-year ceiling under the new Article 11(2), which separately addresses habitual offenders using the more dangerous method of extortion through self-inflicted harm, would then be lower than that for ordinary habitual offenders. If the new provision is read as a special provision applying in preference to Article 9, the category that was meant to be treated more severely may instead be punished more lightly.

The two bills have been referred to a subcommittee of the same committee and propose the same commencement condition. If the two bills are examined together, will the ceiling under the new Article 11(2) be reset to match the new penalty under Article 8, or will both the exclusion of fines and consistency of ceilings be achieved by omitting a ceiling and setting only a minimum, such as imprisonment for a limited term of not less than a certain period?

Sources for this section: National Participatory Legislation Center, National Assembly Legislative Status: Partial Amendment Bill to the Special Act on Prevention of Insurance Fraud (Bill No. 2219016, Park Dae-chul and nine other members) · National Participatory Legislation Center, National Assembly Legislative Status: Partial Amendment Bill to the Special Act on Prevention of Insurance Fraud (Bill No. 2218171, Yoo Dong-soo and nine other members) · Korean Law Information Center, current Special Act on Prevention of Insurance Fraud (Act No. 21066, in force October 1, 2025) · Korean Law Information Center, current Criminal Act (Act No. 22007, in force October 2, 2026)

How Does the New Article 11(2) Fit with Articles 9 and 10 and Article 11(1)?

The current Article 10 punishes only attempts of the offences under Articles 8 and 9. An attempt of the offence under the new Article 11(2) is not included in the list in Article 10. For a habitual offender who staged an accident through self-inflicted harm but did not receive insurance money, the text provides no basis for punishment as an attempt under the new provision; and if such a person is punished for an attempt under Article 9, the new provision's purpose of excluding fines does not operate at the attempt stage.

The current Article 11(1) aggravates the punishment where the profit of a person who has committed an offence under Article 8 or 9 is KRW 500 million or more. The bill does not specify whether, where the profit of a person who has committed the offence under the new paragraph (2) is KRW 500 million or more, the case falls under paragraph (1), or whether paragraph (1) applies as it stands on the view that the new paragraph (2) is a category of Article 9. Since the same conduct also constitutes a habitual offence under Article 9, the text does not state which of the two applies either.

If the new provision is structured to carve out a category of habitual offences, should not the scope of the cross-references in the attempt provision and the profit-based aggravation provision be amended at the same time? If not, in what relationship to Article 9 is the new paragraph (2) intended to be read?

Sources for this section: National Participatory Legislation Center, National Assembly Legislative Status: Partial Amendment Bill to the Special Act on Prevention of Insurance Fraud (Bill No. 2219016, Park Dae-chul and nine other members) · Korean Law Information Center, current Special Act on Prevention of Insurance Fraud (Act No. 21066, in force October 1, 2025)

What Is Meant by Extorting a Person Through Self-Inflicted Harm, and Who Is the Person Extorted?

Insurance fraud under Article 8 is an offence of deceiving an insurer, whereas extortion under Article 350 of the Criminal Act is an offence of obtaining property or a benefit by extorting a person. The new Article 11(2) describes the case of committing an offence under Article 8 by means of extorting a person. The scenario cited in the reasons for the proposal is habitual extortion through self-inflicted harm by deliberately causing motor vehicle accidents, which is explained as endangering the life and body of the victim driver, nearby vehicles and pedestrians. In this scenario, the person extorted appears to be the driver and the person deceived the insurance company, but the provision does not state the relationship between the two.

The reasons for the proposal cite motor vehicle accidents. The provision, however, neither limits its scope to motor vehicles or traffic accidents nor defines the term "self-inflicted harm". The text does not settle whether it covers only cases of deliberate injury or also cases of feigned injury, or whether words or conduct actually intimidating the driver are required. Nor does the bill address the relationship between the two offences where extortion under the Criminal Act is separately established.

If this category is serious enough to exclude fines, its elements must be narrow and clear enough not to be read differently by different judges. How will the provision define self-inflicted harm and extortion, and the relationship where the person extorted and the person deceived differ?

Sources for this section: National Participatory Legislation Center, National Assembly Legislative Status: Partial Amendment Bill to the Special Act on Prevention of Insurance Fraud (Bill No. 2219016, Park Dae-chul and nine other members) · Korean Law Information Center, current Special Act on Prevention of Insurance Fraud (Act No. 21066, in force October 1, 2025) · Korean Law Information Center, current Criminal Act (Act No. 22007, in force October 2, 2026)

Commencement and remaining issues

Both bills propose that the Act enter into force on the date on which six months have elapsed after its promulgation. The proposed commencement condition is not a fixed date. Since Article 1(1) of the Criminal Act makes the constitution and punishment of a crime subject to the law in force at the time of the act, an amendment raising the penalty is read as applying only to acts committed after its entry into force. In habitual offences, multiple acts may straddle the commencement date, but neither bill contains transitional measures addressing this.

If Bill No. 2218171 passes, the profit bands in Article 11(1) of the Special Act on Prevention of Insurance Fraud and those in Article 3(1) of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes will remain the same figures as now. The reasons for the proposal do not state whether raising only the basic penalty while leaving the aggravation bands unchanged is intended.

This piece has not read the National Policy Committee's review report and minutes, the reasons for the proposal and Addenda of the December 2025 amendment of the Criminal Act, other bills amending the same Act, the sentencing guidelines, or actual sentencing statistics. It neither supports nor opposes the two bills and makes no prediction as to their outcome.

Sources for this section: National Participatory Legislation Center, National Assembly Legislative Status: Partial Amendment Bill to the Special Act on Prevention of Insurance Fraud (Bill No. 2218171, Yoo Dong-soo and nine other members) · National Participatory Legislation Center, National Assembly Legislative Status: Partial Amendment Bill to the Special Act on Prevention of Insurance Fraud (Bill No. 2219016, Park Dae-chul and nine other members) · Korean Law Information Center, current Criminal Act (Act No. 22007, in force October 2, 2026) · Korean Law Information Center, current Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Act No. 15256, in force March 20, 2018) · Korean Law Information Center, current Special Act on Prevention of Insurance Fraud (Act No. 21066, in force October 1, 2025)