The Maine Bureau of Insurance has called on state legislators to approve creation of a fraud unit within the bureau that it says will fill a law enforcement gap.
In a recent report to the Legislature's Insurance and Financial Services Committee, the bureau concluded the creation of a fraud unit is feasible. The report recommends establishing a three- person unit that would work in coordination with the office of the attorney general to investigate possible instances of fraud for prosecution.
The report said that presently an “enforcement and prosecutorial gap” has resulted in fraud issues not being adequately addressed in the state.
Paul Tetrault, Northeast states manager for the National Association of Mutual Insurance Companies, applauded the bureau's conclusions. “Having personnel dedicated to fraud-fighting efforts has been shown to be an effective way to ensure that time and resources are devoted to the important task of fighting fraud,” he said.
Mr. Tetrault also said he hoped Maine legislators would work to negate a recent Maine Supreme Judicial Court holding that misrepresentations must be both fraudulent and material before they can prevent an insured from recovering under an insurance policy.
“They should take up the matter of correcting this misguided decision that hampers the ability of insurers to respond appropriately when faced with fraud,” he said.
John Eager, of the Property Casualty Insurers Association of America (PCI), estimated that more than two-thirds of the states today have fraud bureaus.
“Even in a small state such as Maine, they would be able to tailor the office to fit its needs,” he said.
Maine Superintendent Al Iuppa said the matter is now in the hands of the legislature.
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