Insurance Fraud Bill

Contact: Ragan Ingram
(334)241-4146

3/17/2003

Insurance fraud is nothing new; even so, it must be stopped. Forty-seven other states have determined it to be enough of a problem that they have taken the time to pass legislation to make it a crime.

Alabama, however, hasn’t done that. It’s time we do.

The Alabama Legislature will have the opportunity this regular session to join a bi-partisan effort to make insurance fraud illegal in our state by enacting a law. Sen. Zeb Little, a Democrat from Cullman, and Rep. Mike Hill, a Republican from Columbiana, are sponsoring the legislation.

These two legislators bring different perspectives to the bill. Sen. Little is an attorney – a country lawyer, he’s fond of saying – that represents ordinary citizens in many cases.  Rep. Hill is in the title insurance business, providing a service that helps make home ownership possible for Alabamians.  Although they come from different perspectives, they share a common goal – to make sure consumers and industry alike are protected from the crime of insurance fraud.

I am proud to be working with Sen. Little, Rep. Hill and Attorney General Bill Pryor in this effort. Atty. Gen. Pryor has made this bill a cornerstone of his white-collar crime package that he is recommending to the Legislature. Gov. Bob Riley has given his support to this important piece of legislation.  With the Legislature’s approval, the governor’s signature will signal the beginning of the end for insurance fraud in Alabama.

And that’s a good thing.

The legislation was developed from a model created by the National Coalition Against Insurance Fraud. In a recent meeting with a leader of that organization, an alarming message was delivered.

“Every state around Alabama has an insurance fraud law,” said Howard Goldblatt of the National Coalition Against Insurance Fraud. “And the people who make fraud their business know that Alabama doesn’t have a law, so they’ll try to set up shop here to start defrauding Alabama families.”

The last thing Alabama needs is unscrupulous, predatory businesses invading our state, attempting to hoodwink our citizens – particularly our seniors and our disadvantaged. 

This legislation would also deal with those that would attempt to defraud our legitimate companies – thereby driving up insurance rates for honest policy-holding citizens.  Unfortunately, fraud can be found in industry and the public.

We owe to honest Alabamians and to honest Alabama businesses to clean up insurance fraud in our state.  This legislation, I believe, will do that.

Under this legislation, the specific crime of Insurance Fraud is created and an anti-fraud unit within the Alabama Department of Insurance is created.

  •  If an unscrupulous agent or agency is found to have defrauded an individual, licenses can be revoked and civil penalties up to $15,000 per violation are provided.
  • If a person is convicted of Insurance Fraud in the first degree, they will be guilty of a class B felony, which is punishable by two to 20 years imprisonment and fines up to $10,000 per violation.

I couldn’t agree more with Atty. Gen. Pryor, who said that “free enterprise produces wealth and opportunity for our nation only when it is supported by a strong rule of law that punishes wrongdoers.”

Building our economy and protecting the interests of law-abiding citizens are at the core of this legislation, and these ideals are at the nucleus of the mission of the Alabama Department of Insurance.

I encourage Alabama citizens to join me in asking the Alabama Legislature to pass HB271/SB137.  If the Legislature passes this bill, it will be a great victory for Alabama consumers and reputable businesses and hopefully a death blow to those who would take advantage of others.