S.C. $400,000 Budget Proposal Would Pay to Hire Six Insurance Fraud Prosecutors

March 14, 2005

A one-time infusion of $400,000 to permit the South Carolina Attorney General’s Office to hire six new prosecutors to fight insurance fraud has been approved by the Senate Finance Subcommittee to aid in the fight against insurance fraud. At present, the attoney general’s office has only one prosecutor, who handles about 600 cases a year.

The new budget proposal was suggested by David Thomas, R-Greenville, subcommittee chairman. Future budgeting would be provided by insurance companies that save money due to decreased insurance fraud.

“This will ultimately save taxpayers a lot of money,” Thomas told the Charlotte Observer. “We don’t need new laws. We need the enforcement of existing laws.”

Last year there was a proposal to assess the insurance industry $2.5 million to pay for the additional prosecutors. But that effort failed because of disputes over who should pay what percentage of the cost. Thomas said the new proposal should be more appealing to the insurance industry than an upfront assessment.

“Instead of an arbitrary assessment, you only assess them for what you save them,” he said.

Insurance fraud encompasses everything from staged auto accidents to bogus companies that collect premiums but fail to pay off on claims, according to industry and law enforcement agency sources.

“This is a fairly significant development in the insurance fraud effort,” Trey Walker, a spokesman for Attorney General Henry McMaster said. “Crime is a growth industry. Criminals don’t respect budget cuts.”

In 2003, South Carolina had 844 complaints of insurance fraud, totaling about $3.7 million in estimated losses. Nationally, estimates of insurance fraud run between $80 billion and $120 billion annually, or an extra $1,030 per family in higher premiums.

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