Corporate funds paid for the insurance, cash went into company heads’ pockets: Insurance sales outfit handed out 73.2 billion won

[Financial News] Police uncovered an insurance sales organization that provided rebates worth 73.2 billion won by using corporate funds to pay insurance premiums and returning cash to company heads personally in exchange for taking out policies. The group is suspected of also evading 22.9 billion won in taxes by exploiting borrowed names, sham transactions and tax breaks for young entrepreneurs, among other schemes.
On the 11th, the Seoul Metropolitan Police Agency’s Metropolitan Investigation Unit and Metropolitan Criminal Investigation Unit said they had referred 231 people connected to the case to prosecutors, including the insurance sales organization’s ringleader, identified as A, who was arrested on suspicion of violating the Insurance Business Act, tax evasion and breach of trust, among other offenses. The group included 27 associates, 46 company heads and 158 people who lent their names.
A and others ran branches of insurance agencies and urged company heads to take out executive term life insurance policies, offering to return cash to the heads personally.
When a corporation paid the premiums, the insurer paid recruitment commissions to the insurance agency, and A’s group returned some of that money in cash to the company head. Police found that the rebates and other special benefits provided to 505 company heads totaled 73.2 billion won.
Police first referred 46 company heads who had recently entered into contracts and for whom substantial evidence remained, on suspicion of receiving money in breach of trust. They considered the agreement to receive money in return for entering into or maintaining insurance policies to constitute an improper solicitation. Police are also reviewing whether to bring charges against the remaining company heads.
Investigators also found that tax evasion took place as the group raised funds for the rebates. A’s group used the names and bank accounts of insurance agents who had no involvement in actual policy sales to spread out income from recruitment commissions.
They also set up shell companies outside the Seoul metropolitan area to qualify for tax breaks for young entrepreneurs, then fabricated transactions with insurance agencies for customer information (DB) to falsely claim expenses. Police believe the group omitted about 36.8 billion won in income and evaded about 22.9 billion won in comprehensive income tax from 2021 to 2023. A decision was also issued to preserve assets worth about 259 million won pending collection.
Investigators found that the insurance agency’s head office was also harmed. A’s group concealed its rebate-based sales practices from headquarters and received about 116.3 billion won in insurance commissions over roughly three years. The group is also suspected of causing the early cancellation of 410 insurance policies when rebate funds ran short, inflicting losses of about 22.4 billion won on headquarters.
After receiving information about the case in March last year, police launched an investigation and confirmed the use of borrowed names and the cash rebate payment structure through searches and seizures and an analysis of financial transactions.
A police official said, "These kinds of rebates offered to secure insurance contracts may constitute special benefits prohibited under the Insurance Business Act." The official added, "If rebate competition leads to a buildup of early policy cancellations and losses for insurers, it could ultimately burden ordinary policyholders through higher premiums and other costs."

[email protected] Choi Seung-han Reporter