(TRENTON) – Legislation sponsored by Assembly Democrats Celeste Riley, Matthew Milam and Annette Quijano to protect New Jersey consumers by cracking down on insurance fraud was released Monday by an Assembly panel.
The bill (A-944) establishes and enhances insurance fraud prevention measures by broadening information sharing between insurance carriers and law enforcement, making reverse rate evasion a violation of the New Jersey Insurance Fraud Prevention Act and adding anti-fraud measures to the New Jersey Insurance Fraud Prevention Act.
“Insurance fraud is estimated to cost consumers $80 billion per year, translating into higher premiums and making our state more expensive for residents and employers alike,” said Riley (D-Gloucester/Salem/Cumberland). “Auto insurance fraud itself costs the insurance industry an estimated $14 billion each year. We cannot stand idly by while this continues. We need to take steps to toughen our fight against insurance fraud, and that’s what this bill aims to accomplish.”
“The National Insurance Crime Bureau estimates each family pays nearly $950 in added expenses each year due to insurance fraud,” said Milam (D-Atlantic/Cape May/Cumberland). “For many, many families, that’s money that could be going toward a mortgage, tuition or even just savings for the future. If we can take steps to tackle insurance fraud, we should do it.”
“Left unabated, insurance fraud will continue to cost our families and businesses money they cannot afford to lose,” said Quijano (D-Union). “This bill is a step toward tougher penalties and more effective law enforcement, and that should mean savings for consumers and businesses. We cannot let this fraud go unchecked.”
The bill:
· Applies a 7-year statute of limitations to insurance fraud cases brought under the New Jersey Insurance Fraud Prevention Act. This statute of limitations would be similar to the 10-year statute of limitations for civil actions commenced by the state;
· Makes reverse rate evasion a disorderly persons offense, except for people who legitimately obtain insurance in another state based on a second residence or attendance at an education institution. Reverse rate evasion occurs when New Jersey residents fraudulently obtain automobile insurance in another state even though New Jersey is their principal residence or they principally garage the insured vehicle in New Jersey;
· Expands the definition of “insurance-support organization” regarding insurance information practices, to permit any such organization to collect and report information about any person or entity in connection with an insurance transaction;
· Modify the scope of permitted information disclosures with respect to insurance information practices, so that an insurance carrier, among other insurance institutions, or an agent or insurance-support organization may disclose privileged information about a person or entity in connection with, or in reasonable anticipation of, an insurance transaction, to: 1) another insurance institution, agent, or insurance-support organization; 2) any other person or entity involved in detecting or preventing criminal activity or insurance fraud; or 3) a law enforcement or other governmental authority; and
· Expand the existing immunity provided to any person or entity for disclosing information, as well as the existing immunity associated with the mandatory reporting requirements and information furnishings set forth under the “New Jersey Insurance Fraud Prevention Act,” to apply to a cause of action of any nature, instead of the current law’s more limited immunity against causes of action in the nature of defamation, invasion of privacy, or other related actions
The bill was released by the Assembly Financial Institutions and Insurance Committee.
