STATE HOUSE -- Legislation passed by the General Assembly to help prevent insurance fraud has become law. Its sponsors say it will help to bring down the enormous cost of fraudulent insurance payouts that drive up premium prices.

Passed by the legislature were (2010-H7605A), introduced in the House of Representatives by Rep. Brian Patrick Kennedy (D-Dist. 38, Hopkinton, Westerly), and (2010-S2401A), sponsored in the Senate by Sen. Joshua Miller (D-Dist. 28, Cranston, Warwick). The bills became law on June 12 without the governor’s signature and take effect on January 1, 2011.

The legislation adopts a model insurance fraud prevention act recommended by the National Association of Insurance Commissioners and already in place in 30 states. It will require insurers to have fraud warnings on claims and applications forms.

The Insurance Information Institute estimates that 10 percent of property and casualty insurance industry losses and loss adjustment expenses are due to fraud, which costs about $30 billion a year nationally. Requiring insurers to have an anti-fraud plan to properly regulate the industry and to take enforcement action against its licensees will help protect the public from the consequences of fraud, explained the sponsors of the bills, who said it will strengthen insurance regulation without requiring additional resources.

The Department of Business Regulation listed the bill as one of its priority pieces of legislation for this session.

For more information, contact:

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State House Room 20

Providence, RI 02903

(401) 222-2457