Wash. Approves Anti-Fraud Unit

Washington state officials have amended and approved legislation that would create an insurance anti-fraud unit in the insurance commissioner’s office, according to the Property Casualty Insurers Association of America’s (PCI) Northwest Regional Manager Kenton Brine.

“The Washington House Financial Institutions and Insurance Committee, the committee chair, Rep. Steve Kirby (D-Tacoma), and Insurance Commissioner Mike Kreidler along with his staff are to be applauded for working out a compromise that will better protect consumers in this state against insurance fraud,” Brine said.

The bill, SSB (Substitute Senate Bill) 6234, would create a state anti-insurance fraud unit, funded by insurer fees paid to the insurance commissioner’s regulatory account.

The newly amended bill, which was unanimously approved by the committee and sent to the full House for further consideration, includes important changes sought by insurers and added by the House committee. The bill would increase the size of a proposed advisory board from 9 to 10 members, five of whom would be from the insurance industry. The board would make certain that the anti-fraud program is operating successfully and efficiently. It will also recommend whether the program should expand when it is eligible to do so after 2010.

Another provision of SSB 6234 would protect the privacy of information gathered from investigations. This protects the insurers conducting the investigations as well as whistleblowers from having their identities disclosed. Brine said the addition of this provision was critical to the future success of the fraud bureau, as insurers would have been less likely to participate in fraud unit investigations if it meant exposure to baseless lawsuits or inaccurate media coverage of fraud investigations. The provision was added to the bill by State Rep. Mark Ericks (D-Bothell), a former municipal police chief, who clearly understood the need to keep investigation details protected from premature disclosure.

“Fraud costs insurance companies and our customers hundreds of millions of dollars, which adds hundreds of dollars annually to the cost of insurance premiums for every policyholder. This legislation provides the tools and funding that prosecutors, law enforcement and insurance investigators need to not only catch perpetrators of fraud, but prosecute them under the law.”