Florida Chief Financial Officer Tom Gallagher has announced that department rules outlining stricter requirements for insurance companies to report insurance fraud will soon be in place.
In the wake of multiple hurricanes, Mr. Gallagher said he has directed the Department of Financial Services' Division of Insurance Fraud (DIF) to tighten reporting requirements and enhance penalties for failure to report insurance fraud.
"Insurance fraud forces Florida families to pay more in premiums than necessary," Mr. Gallagher said. "With explicit rules and stiff fines in place, there will be no excuses for failing to report fraud."
According to Mr. Gallagher, Florida law requires insurance companies to report insurance fraud but does not provide clear guidance for when and what to report when an insurance claim is considered suspicious.
Under the rules he is promulgating, Mr. Gallagher said insurance companies would be required to:
o Refer fraudulent claims directly and electronically to DIF.
o Detail the process they have in place for identifying and referring suspicious claims.
o Establish minimum standards for training employees in antifraud efforts.
o Update their insurance fraud plans every three years.
o Give DIF authority to order insurers to revise unacceptable fraud plans.
Mr. Gallagher said he is also pushing for a measure to be passed in the upcoming legislative session that would provide fines of up to $50,000 for insurance companies that failed to implement insurance fraud plans and report fraud in timely fashion.
His proposed fraud rules are to be considered at a public hearing next month.
Mr. Gallagher reported that to date, DIF has opened more than 120 investigations of hurricane-related fraud. More than 30 suspects have been arrested for insurance fraud following the 2004 hurricanes, and eight have been convicted.
Mr. Gallagher said that, according to the Coalition Against Insurance Fraud, Florida in the past five years has led the nation in insurance fraud arrests and convictions.
The proposed new fraud rules can be viewed online at http://www.fldfs.com/PressOffice/pdfs/ruledraft11-29-05.pdf
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