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NAMIC Supports Dedicated Fraud Unit in Maine Bureau of Insurance

INDIANAPOLIS (Jan. 4, 2006)—The National Association of Mutual Insurance Companies (NAMIC) has endorsed the conclusion of the Maine Bureau of Insurance that the “time is right” for the creation of a dedicated insurance fraud unit within the Bureau.

In a recent report to the Legislature’s Insurance and Financial Services Committee, the Bureau concluded that the creation of a fraud unit is feasible. The report recommends establishing a three-person unit that would work in coordination with the Office of the Attorney General to investigate possible instances of fraud for prosecution.

“There is no time like the present to fight fraud proactively,” commented NAMIC Northeast Region State Affairs Manager Paul Tetrault. “Having personnel dedicated to fraud-fighting efforts has been shown to be an effective way to ensure that time and resources are devoted to the important task of fighting fraud,” he continued. “Appropriately, the Bureau’s report recognizes the strength of having trained investigators work with dedicated prosecutors in pursuing cases to conclusion.”

In NAMIC’s view, the Bureau’s report is laudable for three reasons:

  • The recognition that the substantial problem of insurance fraud, which affects consumers and insurers alike, is not adequately addressed in Maine’s current governmental operations because of an “enforcement and prosecutorial gap.”
  • Its outline of a system to attack fraud in a proactive manner by closing this gap.
  • The acknowledgement of the need to create a system that is the best fit for Maine.

The report reviews the issue of fraud generally from a national perspective and describes the efforts that other states have taken to address it. In settling on a proper approach for Maine, the Bureau paid particular attention to states with similar demographics and resources. It also recognizes that how a dedicated insurance unit would be funded is a critical issue. “For fraud-fighting to benefit consumers and insurers, it has to be done in a cost-effective manner,” Tetrault pointed out.

NAMIC also believes that the time is right for Maine lawmakers to address a problem created by a Maine Supreme Judicial Court case holding that misrepresentations, omissions and misstatements must be both fraudulent and material in order to prevent an insured from recovering under an insurance policy. The Bureau report notes that the holding in American Home Assurance Company v. Ingeneri, 479 A.2d 897 (Me. 1984) is contrary to statutory language and that property/casualty insurers see correction of it as a high priority. However, the report does not contain a recommendation for the Legislature to address the situation because the Bureau was focused only on the question of whether the creation of a fraud unit was feasible.

“While the Legislature’s attention is focused on the issue of insurance fraud, it should take up the matter of correcting this misguided decision that hampers the ability of insurers to respond appropriately when faced with fraud,” Tetrault said.

For further information, contact
Rick Nelson, APR
(317) 875-5250 Tel
(317) 879-8408 Fax

Posted: Wednesday, January 04, 2006 12:00:00 AM. Modified: Thursday, January 05, 2006 9:42:41 AM.

317.875.5250 - Indianapolis  |  202.628.1558 - Washington, D.C.

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