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Delaware: Commissioner Backs Legislation to Reward Fraud Reporting

Delaware Insurance Commissioner Matt Denn is backing legislation to create a reward program that would pay for tips that lead to civil judgments for insurance fraud.

Sponsored by Sen. David Sokola and Rep. Donna Stone, the proposed legislation would create a "Fraud Busters" program, providing rewards of up to $25,000 for reports that result in civil decisions. The amount of reward in each case would vary based on the potential dollar loss.

"Insurance fraud by a few individuals results in higher rates and costs for the rest of us in Delaware, which is why it's so important to reduce it however we can," Commissioner Denn said in a statement released Jan. 24. "In Delaware and around the country, tips from the public are often the key to uncovering insurance fraud schemes."

Denn pointed out that auto insurance fraud does not just hurt insurance companies but also hits the pocketbooks of every insured driver on Delaware's roads.

"We believe people should be encouraged to come forward with their knowledge or suspicions of insurance fraud and they should be rewarded if their information proves valuable," Sen. Sokola said. "It's worked in Delaware with programs like Crimestoppers and we want to mirror that program to reduce insurance fraud."

"In other states with similar programs, a few thousand dollars of reward money has prevented millions of dollars in fraudulent claims from being paid," Rep. Stone said. "Reducing insurance fraud is one way we know to try to control insurance rates."

Commissioner Denn this week also started releasing lists of individuals who were civilly convicted of or admitted to defrauding insurance companies in 2005. "I said when I took office that I would publicize the identities of those caught engaging in auto insurance fraud and today I am following through on that pledge," Denn said.

Direct questions to NAMIC State Affairs Manager Paul Tetrault.