A Multi‐Line Insurance Fraud Recognition System: A Government‐Led Approach in Korea

Abstract This article introduces a government‐led insurance fraud detection program in Korea. The Insurance Fraud Recognition System (IFRS) uses policy and claims data from multi‐lines of insurance (life, automobile, and fire), employs a three‐stage statistical and link analysis to identify presumably fraudulent claims by claimant or by group, and generates system reports that the government regulator draws on to make decisions. The authors evaluate the system based on the fraud statistics and IFRS results for 2004, and offer recommendations for system improvement. This article examines existing studies about fraud, industry experiments using advanced technology, and government assistance to the insurance industry's fight against fraud in selected countries. It also provides a brief overview of the Korean insurance market, especially after the recent Asian economic crisis.