According to the Issue Brief, 40 states have created fraud bureaus. But Mr. Marshall noted that in the 10 states that have not there have been efforts to statutorily define insurance fraud as well as provide proper penalties.

The New York-based Insurance Information Institute estimated that fraud cost insurers about $29 billion in 2003. The so-called soft fraud, or padding of claims, added up to nearly $6 billion, or 11-to-15 percent of all dollars paid in private passenger auto claims.

State efforts have been producing results, as evidenced by former New York Superintendent of Insurance Greg Serio's successful effort to get state auto writers to reduce rates to compensate for diminishing loss costs, which declined from 86 cents on the dollar in 2002 to 61 cents two years later. He termed such rate reductions an "anti-fraud dividend."

Mr. Marshall said that at least 16 states are considering legislation this year to enhance anti-fraud laws. "Particularly notable are the related bills from Alabama and Vermont, two of the last states in the nation to take action to statutorily recognize insurance fraud and adopt measures to curb related abuses," he said. Oregon is the third state without such laws.