SB354 Alabama 2011 Session

Summary

Primary Sponsor

Ben H. Brooks

Republican

Co-Sponsor

Rusty Glover

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

SB354 would define insurance fraud, create an Insurance Fraud Unit within the Department of Insurance, fund it with insurer assessments, impose penalties, and protect those who report fraud.

What This Bill Does

Defines insurance fraud and the acts that count as fraud, including false information and unlicensed activities. Creates the Insurance Fraud Unit in the Department of Insurance with investigative powers and the ability to issue subpoenas, arrest, and refer cases for prosecution; funds the unit through insurer assessments and establishes an Insurance Fraud Unit Fund. Imposes civil penalties up to $5,000 per violation and criminal penalties by degree, with a six-year filing limit. Establishes reporting requirements, civil immunity for reporters, confidentiality of information, fraud warnings on forms, and regulation of health maintenance organizations under existing commissioner rules.

Who It Affects

• Insurers and other insurance entities in Alabama (including insurers, reinsurers, producers, and HMOs) — they face the new definition of insurance fraud, annual funding assessments for the Fraud Unit, potential licensing actions for violations, and new regulatory requirements.
• Individuals and organizations reporting or assisting in fraud investigations (industry personnel and the public) and the Department of Insurance — reporters gain civil immunity, confidentiality protections for information, mandatory reporting duties, and the Fraud Unit’s authority to investigate and share information with other agencies.

Key Provisions

• Defines insurance fraud and the prohibited acts, including misrepresentation, concealment, record manipulation, unlicensed transactions, and improper premium handling.
• Creates the Insurance Fraud Unit within the Department of Insurance, with powers to investigate, issue subpoenas, administer oaths, share records with other agencies, arrest, and refer cases to the Attorney General.
• Imposes funding and penalties: insurers pay a $200 annual assessment to fund the unit; establishes the Insurance Fraud Unit Fund; civil penalties up to $5,000 per violation; six-year statute of limitations for charging fraud; potential license suspension or revocation for violations.
• Establishes reporting immunity and confidentiality: provides civil immunity for those reporting or providing information, protects confidentiality of records with defined exceptions, requires fraud warnings on certain forms, mandatory reporting for those in the business of insurance, and HMOs to be governed by related rules; authorizes the Commissioner to adopt rules to implement the act.

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