Fraud Targeted by New Texas Initiative

With the creation of the Texas Committee on Insurance Fraud, the Texas insurance industry, state and county agencies, and national organizations are pulling together for the first time a coordinated effort to battle insurance fraud. According to the Insurance Council of Texas, the goal of the new initiative is to drastically reduce insurance fraud on every level to help alleviate higher premiums that are the result of fraudulent claims.

What began as an informal discussion between the ICT, which represents more than 500 property and casualty companies, and the Texas Department of Insurance Fraud Unit led to the creation of the Texas Committee on Insurance Fraud.

“To effectively prosecute individuals who are blatantly stealing money, either from other people or from insurance companies, we needed to include representatives from all segments of the Texas insurance community,” said Mark Hanna, a spokesman for the ICT. “The Committee has grown rapidly and now includes state lawmakers, district attorneys and consumer groups.”

Representatives from the National Insurance Crime Bureau, the Coalition Against Insurance Fraud and the National Health Care Anti-Fraud Association will address the Committee at its first meeting in Austin on Jan. 28.

In the announcement issued by the ICT, Dennis Pompa, the director of the Texas Department of Insurance Fraud unit, said insurance fraud is huge and a growing problem and a coordinated effort is needed to stop it. “The Texas Department of Insurance is making great strides in cracking down on insurance fraud in Texas,” Pompa said. “We look forward to working with the Committee and having access to the expertise and experience of its members.”

The goal of the Committee is to discuss what is needed and propose legislation that could aid officials at all levels in making arrests, prosecuting and ultimately convicting persons responsible for insurance fraud. The Committee is seeking ways to expand the state’s fraud fighting capabilities through public education, enhancing communication and cooperation among fraud-fighting organizations and by proposing legislation to strengthen existing laws.

Hanna says insurance fraud results in families paying $300 or more each year for insurance. “Insurance fraud is not a victimless crime. Every Texan is paying for it,” he said.

Craig Sparks, president of Union Standard Insurance Company in Dallas, will serve as chairman of the Texas Committee on Insurance Fraud. The Committee will be divided into groups that will focus on property and casualty, life, health, workers compensation, enforcement and education. Group chairs will work together to coordinate each group’s activities into proposed legislation.

State Representative Larry Taylor of Friendswood said the Committee is focused. “The insurance industry representatives have highlighted critical areas where fraud is driving up insurance costs for Texas consumers. We will all work together to go after the fraud and the criminals involved,” Taylor said.

Office of Public Insurance Counsel Director Rod Bordelon said he’s participating on the committee because insurance fraud affects all consumers. “There’s been no shortage of unlicensed individuals, companies and insurance scams of all sorts that have ripped people off,” Bordelon said. “If this group can help get these criminals off the streets, they have my support.”

State Representative Jack Stick of Austin, a former state and federal prosecutor, is also working to ensure the Committee’s efforts see results. “I’ve prosecuted these cases and I know what tools we need to enforce a crackdown on fraud,” Stick said. “Aside from the criminal activity that needs to stop, we need to do this to help make insurance more affordable. The criminals’ theft makes insurance more costly for all of us.”

The Texas Committee on Insurance Fraud has grown to more than 50 different individuals and organizations that will meet at 2 p.m. on Jan. 28, 2004, at the Texas Department of Insurance in Austin.