AIIA Supports Alabama Insurance Fraud Bill HB627

Alabama HB627, defining insurance fraud and making it easier for Insurance Commissioner Walter A. Bell to join in with neighboring states to crack down on fraud, has gained the support of the Alabama Independent Insurance Agents.

During AIIA’s Young Agent’s Legislative Conference last week in Montgomery, AIIA issued a position paper supporting five bills and saying it does not support two bills.

The fraud bill defines insurance fraud by a person, an insurer, a reinsurer, a broker, or their respective agents. It would authorize the DOI to investigate suspected insurance fraud and would also require the reporting to certain public officers of suspected insurance fraud.

This bill would also offer civil immunity for certain persons reporting and investigating suspected insurance fraud and would require confidentiality of information and files. This bill would create an Insurance Fraud Unit within the office of the DOI to investigate suspected insurance fraud and provide powers and remedies in enforcing this bill. The bill would provide for assessments to insurers to fund the unit, for the establishment of the Insurance Fraud Unit Fund and would make appropriations from the fund for the fiscal years ending Sept. 30, 2005 and Sept. 30, 2006.

HB627 would provide civil penalties up to $1,000 per violation or suspension of license or certificate of authority. It would also provide for civil and criminal penalties in addition to restitution to the aggrieved party and would limit the filing of a cause of action to six years.

The bill would also authorize the commissioner of insurance to promulgate rules to administer this act and to require licensees of the department to include three hours of continuing education on insurance producer ethics or business practices. The bill would also specify that health maintenance organizations would be subject to rules of the commissioner adopted pursuant to Sections 27-7-43 and 27-7-44, Code of Alabama 1975, relating to licensing and privacy.

AIIA supports this bill because it believes Alabama needs to join its neighboring states in cracking down on fraud. Alabama has regulation in place to deal with agents and insurance companies, but AIIA supports this legislation to cut down on consumer fraud in insurance matters.

There is little in current statutes to discourage those who would commit insurance fraud. AIIA feels this bill would strengthen the fraud investigative process and provide for greater penalties for those caught committing fraud.

Topics Fraud Agencies Alabama