A bill in the Kansas Senate targeting the largest insurance frauds would strength the state’s existing law that doles out little punishment to serious insurance criminals, according to the Coalition Against Insurance Fraud.
“This bill sends a strong signal that Kansas is serious about fighting insurance fraud. Increasing penalties can be a strong deterrent that forces would-be swindlers to think twice about whether the price of getting caught is worth the illicit gains,” says Howard Goldblatt, the coalition’s director of government affairs. Stronger penalties also likely will encourage prosecutors to accept more fraud cases, he added.
SB 114 would sharply increase penalties for insurance fraudsters who steal more than $25,000. This would strengthen a fraud law that ranks among the weakest in the U.S. The bill was drafted and is being pushed by the state insurance department. The coalition applauded the department’s move.
“Hardened criminals have little to fear from the state’s current fraud law, even when they commit major insurance crimes that cause lasting damage to Kansas residents. Frustrated prosecutors have to fight for serious sentences that should be handed down automatically,” Goldblatt says.
Fraud sentences for serious insurance crimes now slant toward mere probation, with a maximum presumed sentence of just six months jail. SB 114 removes the likelihood of probation, steering convicted swindlers toward jail terms up to 26 months when the insurance criminal steals $25,000 or more.
The measure targets, among other frauds, a growing problem with agents who bilk their clients, Goldblatt says.
Most agents are honest, but agent-driven annuities scams, and sales of unsuitable and bogus insurance are causing mounting losses for clients. Seniors are frequent targets, Goldblatt notes.
The insurance department has seen a rise in suspected agent scams it’s investigating. Three of five insurance-fraud convictions have involved agents since the state fraud bureau opened in 2004, officials say. A recent newspaper exposé also revealed extensive problems with agents in Kansas. The state has disciplined 184 agents since 2003, according to news reports.
Staged accident rings also are operating in the Kansas City area, and an increase in ring activity is inevitable, officials say. Organized fraud rings gravitate to urban areas with dense populations. The gangs also seek areas with weak insurance-fraud laws, like Kansas. The rings manufacture real and phantom vehicle crashes. Crooked medical clinics then lodge bogus claims for treating fake soft-tissue injuries. Such schemes can steal thousands of dollars.
SB 114 also would target insurance-driven arsons of buildings, people who torch more-expensive vehicles such as SUVs for insurance money, life-insurance schemes and other large-dollar swindles, Goldblatt notes.
The coalition is a national alliance of insurers, consumer groups and government agencies fighting all forms of insurance fraud.
Source: Insurance Against Insurance Fraud
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