A measure to help tackle insurance fraud in Kentucky – Senate Bill 24 – gained unanimous approval from legislators on the Senate Banking and Insurance Committee.
The legislation would expand the definition of property and casualty insurance fraud to help crack down on nefarious contractors and public adjusters who charge unnecessary or fraudulent fees or who surprise consumers with exorbitant charges, supporters testified.
Sen. Rick Girdler, R-Somerset, is sponsoring the bill. He said it doesn’t deal with insurance claims related to bodily injury, only property and casualty insurance. The proposed changes would add more teeth to the law, he said.
You have to prosecute these people. If you don’t prosecute them, we’re in trouble.
Sen. Rick Girdler, R-Somerset
Eric DeCampos of the National Insurance Crime Bureau testified that the bill would provide law enforcement personnel with additional tools to investigate insurance fraud and close loopholes in state laws that are being exploited by fraudsters.
Chris Nolan, testifying on behalf of the Insurance Institute of Kentucky, told committee members that Kentuckians are familiar with storms and catastrophes that have become common. He said the events give unscrupulous people opportunities to commit insurance fraud and prey upon already vulnerable consumers.
As many of you already know, property and casualty insurance fraud is not a victimless crime. It’s estimated that the cost to a single family each year is between $400 and $700 in increased premiums due to insurance fraud.
Chris Nolan, testifying on behalf of the Insurance Institute of Kentucky
Nolan said most contractors and adjustors do a great job in providing services to help people rebuild, but some contractors and public adjusters charge unnecessary, exorbitant, or fraudulent fees to inflate insurance claims.
Sen. Brandon J. Storm, R-London, asked those testifying about insurance fraud enforcement.
“Is this an issue that commonwealth’s attorneys across the commonwealth are not prosecuting insurance fraud,” he asked. “Because if that’s the case, can you show me a commonwealth’s attorney in Kentucky that’s not doing their job as it relates to insurance fraud enforcement?
Nolan said an insurance fraud task force meets quarterly, and Department of Insurance investigators update stakeholders regarding the millions of dollars they recover from fraud. Additionally, officials of the DOI have been referring cases to the Kentucky attorney general for prosecution.
Senate Minority Whip David Yates, D-Louisville, said he can support the bill because it clarifies criminal intent.
I appreciate your willingness to work with this bill to make sure that it’s narrowly tailored and actually goes to making sure that someone has criminal intent
Senate Minority Whip David Yates, D-Louisville
The American Property Casualty Insurance Association (APCIA) fully supports the bill, calling it a key consumer protection measure.
“Fraudulent and abusive practices by some third parties drive up costs for all consumers,” said Ron Jackson, APCIA’s vice president of state government relations, in a statement. “We will continue working with the Kentucky Legislature to pass this bill.”
Lawmakers and regulators across the country have been cracking down on fraudulent public adjusters for some time.
