Assembly Panel Approves Bill To Crack Down On Insurance Fraud

TRENTON – Legislation intended to crack down on insurance fraud was released unanimously Monday by an Assembly panel.

The bill (A-944) establishes and enhances insurance fraud prevention measures by broadening information sharing between insurance carriers and law enforcement, making reverse rate evasion a violation of the New Jersey Insurance Fraud Prevention Act and adding anti-fraud measures to the New Jersey Insurance Fraud Prevention Act.

“Left unabated, insurance fraud will continue to cost our families and businesses money they cannot afford to lose,” said Assemblywoman Annette Quijano (D-Union). “This bill is a step toward tougher penalties and more effective law enforcement, and that should mean savings for consumers and businesses. We cannot let this fraud go unchecked.”

The bill:

  • Applies a 7-year statute of limitations to insurance fraud cases brought under the New Jersey Insurance Fraud Prevention Act. This statute of limitations would be similar to the 10-year statute of limitations for civil actions commenced by the state;
  • Makes reverse rate evasion a disorderly persons offense, except for people who legitimately obtain insurance in another state based on a second residence or attendance at an education institution. Reverse rate evasion occurs when New Jersey residents fraudulently obtain automobile insurance in another state even though New Jersey is their principal residence or they principally garage the insured vehicle in New Jersey;
  • Expands the definition of “insurance-support organization” regarding insurance information practices, to permit any such organization to collect and report information about any person or entity in connection with an insurance transaction;
  • Modify the scope of permitted information disclosures with respect to insurance information practices, so that an insurance carrier, among other insurance institutions, or an agent or insurance-support organization may disclose privileged information about a person or entity in connection with, or in reasonable anticipation of, an insurance transaction, to: 1) another insurance institution, agent, or insurance-support organization; 2) any other person or entity involved in detecting or preventing criminal activity or insurance fraud; or 3) a law enforcement or other governmental authority; and
  • Expand the existing immunity provided to any person or entity for disclosing information, as well as the existing immunity associated with the mandatory reporting requirements and information furnishings set forth under the “New Jersey Insurance Fraud Prevention Act,” to apply to a cause of action of any nature, instead of the current law’s more limited immunity against causes of action in the nature of defamation, invasion of privacy, or other related actions

The bill was released by the Assembly Financial Institutions and Insurance Committee.


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