SB3 Alabama 2010 1st Special Session

Under existing law, material or fraudulent misrepresentations, omissions, concealment of facts, and incorrect statements in insurance transactions are prohibited and an insurance producer who violates these prohibitions may have his or her license revoked

This bill would specifically define insurance fraud by a person, an insurer, a reinsurer, a broker, or their respective agents

This bill would authorize the Department of Insurance to investigate suspected insurance fraud and would also require the reporting to certain public officers of suspected insurance fraud

This bill would also offer civil immunity for certain persons reporting and investigating suspected insurance fraud and would require confidentiality of information and files

This bill would create the Insurance Fraud Unit within the office of the Department of Insurance to investigate suspected insurance fraud and would provide powers and remedies in enforcing this bill

The bill would provide for assessments on insurers to fund the unit, for the establishment of the Insurance Fraud Unit Fund, and would make appropriations from the fund for the fiscal years ending September 30, 2010, and September 30, 2011

This bill would provide civil penalties up to $1,000 per violation or suspension of license or certificate of authority. This bill would also provide for civil and criminal penalties in addition to restitution to the aggrieved party and would limit the filing of a cause of action to six years

The bill would also authorize the Commissioner of Insurance to promulgate rules to administer this act and to require licensees of the department to include three hours of continuing education on insurance producer ethics or business practices

The bill would also specify that health maintenance organizations would be subject to rules of the commissioner adopted pursuant to Sections 27-7-43 and 27-7-44, Code of Alabama 1975, relating to licensing and privacy

Amendment 621 of the Constitution of Alabama of 1901, now appearing as Section 111.05 of the Official Recompilation of the Constitution of Alabama of 1901, as amended, prohibits a general law whose purpose or effect would be to require a new or increased expenditure of local funds from becoming effective with regard to a local governmental entity without enactment by a 2/3 vote unless: it comes within one of a number of specified exceptions; it is approved by the affected entity; or the Legislature appropriates funds, or provides a local source of revenue, to the entity for the purpose

The purpose or effect of this bill would be to require a new or increased expenditure of local funds within the meaning of the amendment. However, the bill does not require approval of a local governmental entity or enactment by a 2/3 vote to become effective because it comes within one of the specified exceptions contained in the amendment

Relating to the Department of Insurance; to define insurance fraud; to authorize the department to oversee and investigate suspected insurance fraud; to provide for confidentiality of information and files; to create the Insurance Fraud Unit within the department; to provide for assessments on insurer, to establish the Insurance Fraud Unit Fund, and to make appropriations from the fund for the fiscal years ending September 30, 2010, and September 30, 2011, for the operation of the Insurance Fraud Unit; to provide certain immunity from civil liability for certain persons reporting and investigating suspected insurance fraud; to provide civil and criminal penalties; to authorize the Commissioner of Insurance to promulgate rules necessary to implement and administer this act and requiring licensees subject to continuing education requirements to include courses on ethics or business practices; for this purpose to amend Section 10-4-115, Code of Alabama 1975, as last amended by Act No. 2008-502, 2008 Regular Session, relating to health care service plans, and Section 27-21A-23, Code of Alabama 1975, as last amended by Act No. 2008-502, 2008 Regular Session, relating to health maintenance organizations; and in connection therewith would have as its purpose or effect the requirement of a new or increased expenditure of local funds within the meaning of Amendment 621 of the Constitution of Alabama of 1901, now appearing as Section 111.05 of the Official Recompilation of the Constitution of Alabama of 1901, as amended.