HB460 Alabama 2011 Session

Summary

Primary Sponsor

Steve McMillan

Republican

Session

Regular Session 2011

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, 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

HB460 would define insurance fraud, create an Insurance Fraud Unit in the Alabama Department of Insurance, and establish funding, reporting immunity, and penalties to fight insurance fraud.

What This Bill Does

It defines insurance fraud and authorizes the Department of Insurance to investigate suspected fraud and to take reports from public officers. It creates the Insurance Fraud Unit within the department and gives it investigative and enforcement powers, plus a dedicated fund funded by insurer assessments. It imposes civil and criminal penalties for fraud, sets a six-year limit on prosecutions, and allows license actions against those who violate laws related to the business of insurance. It requires fraud warnings on certain forms, mandates reporting by those in the insurance business, and provides immunity for those who report or assist in investigations, along with confidentiality protections for investigation materials.

Who It Affects

• Insurers, reinsurers, brokers, and health maintenance organizations must pay annual assessments to fund the Insurance Fraud Unit and may face licensing penalties for fraud.
• Individuals and entities suspected of or convicted of insurance fraud, and people who report fraud, face criminal and civil penalties, enjoy reporting immunity, and are subject to confidentiality rules protecting investigation materials.

Key Provisions

• Defines insurance fraud by persons, insurers, reinsurers, brokers, and their agents.
• Creates the Insurance Fraud Unit within the Department of Insurance with investigative and enforcement powers.
• Establishes funding via a $200 annual assessment on insurers and creates the Insurance Fraud Unit Fund, with appropriations for 2011 and 2012.
• Sets civil penalties up to $5,000 per violation and license suspensions or revocations; creates first/second/third degree insurance fraud crimes with defined penalties.
• Establishes a six-year statute of limitations for prosecutions and disqualification for offenders.
• Imposes fraud warnings on certain forms, mandates mandatory reporting by those in the insurance business, and provides immunity and confidentiality protections for reporters and investigation materials.
• Requires HMOs to follow licensing and privacy rules and allows the commissioner to issue rules to implement the act.
• Allows the unit to conduct investigations outside Alabama and coordinate with other agencies.
• Effective date: becomes effective on the first day of the third month after passage.
• Amends existing laws (sections 10-4-115 and 27-21A-23) to align with the act.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Insurance Department