BILL ANALYSIS
SENATE COMMITTEE ON BANKING, FINANCE,
AND INSURANCE
Senator Ronald Calderon, Chair
SB 156 (Wright) Hearing Date: May 6, 2009
As Amended April 14, 2009
Fiscal: No
Urgency: No
SUMMARY Would revise existing law giving immunity from civil
liability to an insurer that in response to a written request
from law enforcement discloses information without malice about
specific insurance fraud to include immunity for disclosures of
emerging trends and schemes involving insurance fraud and
evidence of other criminal activity not involving such fraud
when disclosed in meetings convened by the insurance
commissioner, a district attorney, or by their designated
representatives. Would allow such meetings to include
representatives of multiple insurance companies.
DIGEST
Existing law
1. Imposes upon insurers an obligation to report suspected
violations of law to appropriate local law enforcement agencies.
2. Provides immunity from civil liability to insurers who provide
information concerning specific instances of insurance fraud in
response to a written request from specified law enforcement
officials.
3. This provision applies to all classes of insurance fraud other
than workers compensation fraud and auto insurance fraud.
4. Information provided to a law enforcement officer pursuant to
this law is not a part of any public record and shall not be
released until released as part of a criminal or civil
proceeding.
This bill
1. States legislative intent that a Department of Insurance
Advisory Task Force on Fraud reported in 2008 that insurance
SB 156, Page 2
fraud costs Californians 15 billion dollars per year, or an
average of more than $500 dollars per resident per year, and
makes related findings.
2. Would allow information on emerging trends and schemes of
insurance fraud and evidence of other criminal activity not
involving insurance fraud to be shared by an insurer in
meetings convened by the insurance commissioner, district
attorneys, or their designated representatives.
3. The measure also authorizes meetings convened for this
purpose by the insurance commissioner, a district attorney
or their designated representatives to include
representatives from more than one insurer for purposes of
such discussions and sharing of information.
4. Information shared pursuant to these provisions is subject
to the same liability immunity for insurers that information
on specific insurance frauds receives under current law and
is subject also to the non-disclosure provisions of current
law.
COMMENTS
1. Purpose of the bill SB 156 is intended by the author to
implement a recommendation of the California Insurance
Commissioner's Advisory Task Force on Insurance Fraud. It
aims to enable people who see different parts of the fraud
puzzle to put their pieces together to reveal patterns of
fraud.
2. The expected outcome is strengthening the ability of the
insurance commissioner and district attorneys to combat
fraud and fraud-related criminality by enabling them to
convene meetings with insurers to promote discussion of
fraud trends and other criminality where the immunity from
liability of existing law can be provided to promote full
participation.
3. Background In May 2008 the Advisory Task Force on Insurance
Fraud of the Department of Insurance issued a report on
"Reducing Insurance Fraud in California".
Its notable findings included:
1. Statewide cost of fraud is over 15 Billion
dollars per year or more than 500 dollars per
resident.
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2. Fraud results in higher insurance
premiums, higher taxes, higher prices and lower
levels of government services.
3. Insurance fraud is the second most costly
crime in our country, after tax evasion, according
to the National Insurance Crime Bureau.
4. There is no stereotype or profile of
people who commit insurance fraud and can be
committed in many forms by individuals, businesses
and criminal organizations.
A specific recommendation of the Advisory Task Force was to
"strengthen the immunity provisions for companies that
report suspected fraud and cooperate in investigations in
accordance with the National Association of Insurance
Commissioners (NAIC) Insurance Fraud Prevention Model Act.
This bill will implement this recommendation.
1. Support Los Angeles District Attorney
San Diego District Attorney
California Peace Officers' Association
California Police Chief's Association
CNA Insurance
2. Opposition None
3. Questions None
4. Suggested Amendments None
5. Prior Legislation None
POSITIONS
Support
SB 156, Page 4
Los Angeles District Attorney
San Diego District Attorney
California Peace Officers' Association
California Police Chief's Association
CNA Insurance
Oppose
None
Consultant: Kenneth Cooley (916) 651-4102