SB3 Alabama 2010 Session

Summary

Primary Sponsor

Ben H. Brooks

Republican

Co-Sponsor

Trip Pittman

Session

Regular Session 2010

Title

Insurance fraud, defined, investigations by Insurance Department, civil immunity for reporting fraud, Insurance Fraud Unit and fund created in Insurance Department, civil and criminal penalties, six year filing limit, certain continuing education required, Secs. 27-12A-1 to 27-12A-8, incl., 27-12A-20 to 27-12A-24, incl., 27-12A-40 to 27-12A-42, incl., added; Secs. 10-4-115, 27-21A-23 am'd.

Summary

SB3 would create an Insurance Fraud Unit inside the Alabama Department of Insurance, define insurance fraud, require reporting and ethics training, and fund enforcement with insurer assessments.

What This Bill Does

It defines insurance fraud and creates a formal crime scheme with degrees of offense. It authorizes the Department of Insurance to investigate suspected fraud, requires reporting to public officials, and grants civil immunity for reporters while keeping information confidential. It establishes the Insurance Fraud Unit with investigative powers, creates a funding mechanism through insurer assessments, and imposes penalties (civil and criminal) along with license suspensions or revocations, plus restitution. It also requires continuing education on ethics for licensees and applies related rules to health maintenance organizations.

Who It Affects

• Insurers authorized to write insurance in Alabama will pay an annual $200 assessment to fund the Insurance Fraud Unit; failure to pay can lead to suspension or revocation of their certificate of authority.
• Insurers, reinsurers, brokers, producers, agents, and other persons in the insurance business could be charged with insurance fraud, face civil penalties up to $1,000 per violation, possible license suspensions or revocations, and potential restitution or criminal penalties.
• Consumers and parties aggrieved by fraud may receive restitution as part of penalties or enforcement actions.
• Health maintenance organizations (HMOs) will be subject to specific licensing, privacy, and related requirements under the act.
• Public officials, law enforcement, regulatory agencies, and the Attorney General may interact with the unit and rely on immunity provisions for reporting and information sharing.

Key Provisions

• Defines insurance fraud to include deceitful acts by individuals, insurers, reinsurers, brokers, and their agents, and establishes degrees of fraud with corresponding penalties.
• Creates the Insurance Fraud Unit within the Department of Insurance, with powers to investigate, subpoena records, administer oaths, arrest, and refer cases for criminal action; enables cross-state investigations.
• Imposes a funding mechanism through annual assessments of $200 per insurer writing in Alabama to the Insurance Fraud Unit Fund; appropriations are limited to specified fiscal years and used for unit operations.
• Imposes civil penalties up to $1,000 per violation and allows for license suspensions or revocations; also provides for civil and criminal penalties and restitution; sets a six-year filing limit for prosecutions.
• Requires three hours of continuing education on insurance producer ethics or business practices for licensees; authorizes rules to implement the act.
• Mandates fraud warnings on certain insurance forms and requires mandatory reporting of suspected fraud by those in the insurance business, with immunity from civil liability for reporting; confidentiality protections for unit documents.
• Gives the unit authority to investigate and enforce, including cross-state investigations, and to share information with appropriate federal, state, and local agencies; requires confidentiality of investigative records with specific exceptions.

AI-generated summary using openai/gpt-5-nano on Feb 25, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Insurance Department