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NAMIC Pushes For Reforms of Indiana Fraud, UM/UIM Laws

INDIANAPOLIS (Feb. 8, 2005)––Appearing before both the Indiana House and Senate insurance committees on Thursday, National Association of Mutual Insurance Companies (NAMIC) State Affairs Manager, Tami Stanton, called for legislation to reverse state court decisions altering the intent and pricing of uninsured/underinsured motorists coverage, as well as for a clearer definition of insurance fraud. The two bills supported by NAMIC passed out of committee and are now headed for consideration by their respective chambers.

“Thursday was the best day the insurance industry has experienced since the start of the 2005 legislative session,” said Stanton.

The House Insurance Committee heard testimony on HB 1403, which deals with insurance fraud. The Senate Insurance and Financial Institutions Committees considered SB 125, addressing a pair of UM/UIM court cases with negative implications for the insurance industry.

The fraud bill, spearheaded by the Insurance Institute of Indiana and the Indiana Association of Special Investigation Units, more clearly defines insurance fraud and significantly expands the list of fraudulent activities. Some technical work on the bill remains.

Stanton expressed concerns regarding the bill’s use of the terms “agent” and “broker.” “Those terms are not defined in the Indiana statute and the term ‘producer’ needs to be substituted to be consistent with the NAIC [National Association of Insurance Commissioners] Producer Licensing Act previously adopted by Indiana and 47 other states.”

Chairman Mike Ripley asked NAMIC to assist in drafting the appropriate language for a second reading amendment. HB 1403 passed the committee unanimously.

Stanton also expressed NAMIC’s strong support for SB 125 in the Senate insurance committee hearing. The bill addresses two court Indiana decisions that have altered the intent and pricing of uninsured/underinsured motorists coverage in the state. SB 125 addresses United National Insurance Company v. DePrezio and West Bend V. Keaton, both emanating from Indiana’s mandatory offer of UM/UIM on personal auto policies.

The DePrezio decision stated that a policy intended to protect the insured against claims under an umbrella policy was the same as a policy intended to protect the insured’s own interests. In West Bend, the court ruled that a policy providing liability coverage on hired and nonowned vehicles had to provide UM/UIM coverage, even when the vehicle is not registered in Indiana or listed with the insurer. SB 125, introduced by the Insurance Institute of Indiana, states insurers are not required to offer UM/UIM coverage on commercial policies. The bill passed out of committee 10-1.

Links to text of bills:

Both measures move on to second reading on the floor of their respective chamber where they can be amended prior to final passage on third reading.

Posted: Tuesday, February 08, 2005 12:00:00 AM. Modified: Tuesday, February 08, 2005 9:45:05 AM.

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