BILL ANALYSIS
SB 156
Page 1
Date of Hearing: June 24, 2009
ASSEMBLY COMMITTEE ON INSURANCE
Jose Solorio, Chair
SB 156 (Wright) - As Amended: June 16, 2009
SUBJECT : Insurance fraud prevention and detection.
SUMMARY : Authorizes the Insurance Commissioner (IC) to convene
meetings with representatives of insurers to discuss suspected
or completed acts of insurance fraud. Specifically, this bill :
1)Authorizes the IC to convene meetings with representatives of
insurance companies to discuss specific information concerning
suspected, anticipated, or completed acts of insurance fraud.
2)Specifies that information shared during the course of those
meetings that is related to suspected, anticipated, or
completed acts of insurance fraud, in the absence of fraud or
malice, shall not make a person subject to civil liability for
libel, slander, or any other relevant cause of action.
EXISTING LAW :
1)Requires insurance companies to operate a unit or division to
investigate possible fraudulent claims by insured persons.
2)Requires an insurance company, upon a written request by an
authorized governmental agency, to release all relevant
information possessed by the insurance company related to any
specific insurance fraud. "Authorized governmental agency"
includes various state agencies including the California
Department of Insurance (CDI), police departments, and county
district attorneys.
3)Provides insurers with immunity from civil liability for libel
or slander for releasing information to authorized
governmental agencies about specific insurance fraud. The
only exceptions to this immunity are in the event of fraud or
malice on the part of the insurer.
FISCAL EFFECT : None.
COMMENTS :
SB 156
Page 2
1)Purpose of bill. This bill would implement a recommendation
of the CDI's Advisory Task Force on Insurance Fraud. The
author states that the purpose of the bill is to allow the IC
to convene meetings with insurers, where the IC or a
designated deputy commissioner would be in constant
attendance, to discuss suspected or confirmed cases of fraud
in order to share basic information about insurance trends and
other information to help reduce insurance fraud. The bill
aims to enable people who see different parts of the fraud
puzzle to put their pieces together to reveal patterns of
fraud.
2)Background. This bill is sponsored by the author who notes
that in May 2008, the CDI Advisory Task Force on Insurance
Fraud made a series of recommendations to the Insurance
Commissioner to help reduce insurance fraud, including
strengthening the immunity provisions for insurance companies
that report suspected fraud and cooperate in investigations in
accordance with the National Association of Insurance
Commissioners (NAIC) Insurance Fraud Prevention Model Act.
Additionally, the May 2008 report of the CDI Advisory Task Force
on Insurance Fraud, entitled "Reducing Insurance Fraud in
California," reported the following:
a) insurance fraud in California totals over $15 billion
each year, and results in higher insurance costs, higher
taxes, and lower levels of government services;
b) insurance fraud is the second most costly crime in
America;
c) insurance fraud can directly affect innocent,
law-abiding people, dramatically changing their lives
forever. For example, fraud perpetrators have staged
collisions resulting in loss of life, and have driven
companies out of business by damaging their bottom line and
their hard-earned reputation. Vulnerable groups such as
seniors, recent immigrants, or small businesses may be
special targets of sophisticated swindlers.
3)Clarifying technical amendment. The bill proposes that in
meetings of the IC and insurance companies where information
is shared related to suspected or completed acts of insurance
fraud, that the information shared, in the absence of fraud or
SB 156
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malice , shall not make a person subject to civil liability for
libel or slander. The manner in which it is written in the
bill raises the question: If no fraud or malice is found,
would the immunity be lost? The purpose of the bill can be
made clearer by the following re-phrasing on page 2, lines 29
- 33 of the bill:
Information shared during the course of those meetings that
is related to suspected, anticipated, or completed acts of
insurance fraud, in the absence of fraud or malice on the
part of the representatives of insurance companies and the
commissioner or designated deputy, shall not make person
subject to civil liability for libel, slander, or any other
relevant cause of action.
4 Technical amendment. The findings and declarations portion of
the bill contains a sentence relating only to the workers'
compensation program but the substantive part of the bill
relates to many lines of insurance. It is suggested that on
page 2 of the bill, lines 5 - 6, the following line be
deleted:
Workers' compensation business accounted for 11.5 billion
dollars ($11,500,000,000) of that business as of
2006.
REGISTERED SUPPORT / OPPOSITION :
Support
California Peace Officers' Association
California Police Chiefs Association
CNA Insurance
District Attorney of San Diego County
Personal Insurance Federation of California
Opposition
None received.
Analysis Prepared by : Manny Hernandez / INS. / (916) 319-2086