Lawmakers demand claims fraud scrutiny of insurance companies
BY BEATRICE E. GARCIA
Posted Dec. 08, 2005
Lawmakers and regulators call for claims-fraud investigations related to 2004's busy hurricane season.
TALLAHASSEE - As insurers wrestle with hundreds of thousands of claims from this year's hurricanes, there are renewed calls to review how these companies handled the claims from the 2004 storms.
Sen. Ron Klein, D-Delray Beach, has asked the state's Office of Insurance Regulation to investigate whether insurers paid hundreds of fraudulent claims from Hurricanes Charley, Frances, Jeanne and Ivan.
Klein also called for a rate freeze until insurers' claims-paying practices are fully investigated. Klein sent letters to both Tom Gallagher, Florida's chief financial officer, and Charlie Crist, the state attorney general.
The state senator's concern stems from a recent Orlando Business Journal article that reviewed 2004 claims payments from major insurance companies. The weekly paper found that claims were paid in all 67 counties in the state. Yet, in some instances, claims were paid for storms that hit areas hundreds of miles away.
''The Office of Insurance Regulation needs to inspect all aspects of how these numbers were reported and determine if there were errors in reporting,'' said Gallagher in a statement.
''I'm confident the insurance commissioner will conduct a thorough review,'' Gallagher added through Robert Lotane, Department of Financial Services spokesman.
Gallagher said Wednesday that DFS will soon put in place stricter requirements for insurers to report insurance fraud.
He's also asking for tougher penalties, including fines of up to $50,000, for failing to implement plans to deter insurance fraud and to report suspected fraudulent claims in a timely manner. His new rules, which include requirements for more training and updated anti-fraud plans, will be discussed in a public hearing in Tallahassee sometime next month.
Right now, Florida law requires insurance companies to report insurance fraud but does not provide clear guidance for when and what to report when a claim is considered suspicious.
So far, the Florida Division of Insurance Fraud has opened more than 120 investigations of hurricane-related fraud. More than 30 suspects have been arrested following the 2004 hurricanes, and eight have been convicted.
In the last five years, Florida has led the nation in insurance fraud arrests and convictions, according to the Coalition Against Insurance Fraud.