Online Alert For Phony Insurers Formed

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By Daniel Hays

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NU Online News Service, Sept. 16, 12:00 p.m. EDT,Chicago?An e-mail alert system was set here yesterday towarn state anti-fraud officials about the activities ofunauthorized insurance operations.

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The action was announced at a meeting of the Antifraud TaskForce at the fall session of the National Association of InsuranceCommissioners.

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Jim Harrington, chief of the investigative unit of theCalifornia Insurance Department said the proliferation ofunauthorized insurance entities was primarily in the propertycasualty field. Since neither buyers nor sellers of unauthorizedinsurance products are willing come forward and report theactivity, "early detection is an issue."

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He said the Task Force would create an e-mail list to warnenforcement officials of such operations. "We believe theinformation should be available to all states," he said.

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Mr. Harrington said after the meeting that though figures onunauthorized operations are hard to come by, "we know there hasbeen a proliferation." In California it has been most pronounced inthe workers' compensation insurance area.

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Enterprises engaged in sales of phony insurance, he said,generally arise following the high prices of hard markets and preyupon buyers in financial trouble.

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