LOTTE AUTO CARE uncovers 245 fraudulent accident cases; concealing drunk or unlicensed driving was most common

[Financial News] A dedicated team at LOTTE AUTO CARE, the vehicle-management subsidiary of LOTTE rental Co., Ltd. that investigates rental-car accidents, uncovered 245 improper insurance claims over two and a half years involving concealed drunk or unlicensed driving or driver substitution.
LOTTE AUTO CARE said on the 3rd that its accident-focused Special Investigation Unit (SIU) had uncovered such cases and had recovered or prevented payments totaling approximately KRW 2.92 billion.
The scale of detected insurance fraud is growing. According to the Financial Supervisory Service, the amount of insurance fraud uncovered in the first half of this year was KRW 620 billion, up 9.1% from the same period last year.
Auto insurance accounted for the largest share, at KRW 288 billion. Last month, the National Police Agency also said it would operate a year-round, ongoing crackdown on traffic-accident insurance fraud.
LOTTE AUTO CARE says fraudulent accident claims also occur in rental-car and car-sharing accidents, with people concealing drunk or unlicensed driving or reporting someone other than the actual driver. It is responding by using an SIU—the kind of unit insurance companies operate to investigate insurance fraud—which it introduced as the first in the rental-car industry.
LOTTE AUTO CARE handles accident repairs and maintenance exclusively for vehicles from LOTTE rent-a-car, LOTTE Auto Lease and the car-sharing service 'LOTTE rent-a-car G car' (G car). Because it can directly oversee the entire process, from the initial accident report through completion of repairs, the SIU draws on the investigative expertise of specialists with backgrounds as police investigators to identify suspicious accidents.
Investigations begin when something suspicious is found in an accident report. The company also operates a reporting channel through which employees, including customer-service representatives and maintenance managers, can promptly report suspicious circumstances. The SIU analyzes whether the time and location of an accident, the vehicle damage and the driver's account are consistent, and verifies the facts through on-site investigations and interviews.
For accidents involving insurance claims for another person or vehicle, the SIU investigates together with the insurance company's investigation team. Single-vehicle accidents, with no other vehicle involved, are considered difficult to determine as fraudulent; the company said the SIU uncovers improper cases in such accidents as well.
Of the 245 cases uncovered, the SIU found 190 through its own investigations, while the remaining 55 were uncovered in investigations conducted with insurance-company teams. By type, concealing drunk or unlicensed driving was the most common, accounting for 27.2%. Other cases involved driver substitution, deliberate accidents, collusion in accidents and violations of rental agreements.
The approximately KRW 2.92 billion amounts to an average of approximately KRW 12 million per case. Of that total, KRW 1.17 billion was for repairs to the rental cars themselves, while the remaining KRW 1.75 billion was insurance compensation for people injured in accidents and other vehicles or property damaged.
LOTTE AUTO CARE said fraudulent accidents can also affect honest customers. Costs from undetected fraudulent accidents can lead to company losses and higher insurance premiums, ultimately putting pressure on rental rates. Fraudulent accidents are prohibited under rental terms, and customers caught engaging in them are not eligible for a damage waiver and must pay the full repair costs themselves.
G car is a car-sharing service that lets customers rent and return vehicles through an app without meeting staff. Each time a vehicle is rented, the service checks that the driver's license and identity-verification details are valid. It also blocks logins from devices other than the user's own phone to prevent people from using someone else's account. The SIU identifies fraudulent-use incidents that occur despite these safeguards through follow-up investigations.
LOTTE AUTO CARE urged people to ensure that the actual driver reports the facts truthfully when an accident occurs. The company said truthful reporting allows insurance claims to be handled quickly and accurately.
A LOTTE AUTO CARE representative said, “Fraudulent accidents are crimes that can even result in criminal punishment, and their consequences may fall on honest customers,” adding, “We will work to uncover and prevent them and create a rental-car environment where customers can use our services with peace of mind.”
[email protected] Kim Dong-chan Reporter