NAIC Sets Up Fraud Line

The National Association of Insurance Commissioners has set up a new fraud reporting line to serve the life, health and property-casualty insurance industries. [@@]

The Online Fraud Reporting System is a secure Web section on the NAIC Web site that can help insurers meet state fraud-reporting mandates.

The hotline has been in its preliminary stages in the past 2 months with, any information reported going directly to the states and then to an NAIC database.

Starting in July, the tips will go directly to the NAIC, Kansas City, Mo., which then will direct the tips to the appropriate state insurance department. The agency also will keep the data in a database of its own.

Property-casualty industry representatives have expressed concern about possible duplication of efforts.

Don Cleasby, assistant general counsel at the Property Casualty Insurers Association of America, Des Plaines, Ill., says his member companies are concerned about the fact that the fraud line appears to duplicate an existing reporting program run under the aegis of the Insurance Services Office and the National Insurance Crime Bureau.

"With the NAIC setting up an independent database, are we going to have to be doing this twice?" he asks.

Such duplication of reporting efforts could increase costs and lead to errors, Cleasby says.

NAIC technical experts say the NICB provides a fraud reporting mechanism for members that are exclusively property-casualty companies, while the NAIC system will handle reports for all lines.

As for the concerns about confidentiality, "unlike the NICB database, the NAIC fraud database is not for sale, nor is it for use in the underwriting or claims adjustment of thousands of insurers," according to the NAIC experts.

NAIC Sets Up Fraud Line

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NAIC Sets Up Fraud Line

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