SLS 10RS-2624 REENGROSSED
Page 1 of 8
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
Regular Session, 2010
SENATE BILL NO. 792 (Substitute for Senate Bill No. 136 by Senator Morrish)
BY SENATOR MORRISH
PUBLIC SFTY/CORRECT DEPT. Provides relative to the insurance fraud investigation
unit. (8/15/10)
AN ACT1
To amend and reenact R.S. 22:2134(B)(3)(d), R.S. 40:1421, the introductory paragraph of2
1422(A), 1422(C), the introductory paragraph of 1427, 1427(1) and (3), 1428(A)(1)3
and (4)(a) and (C), and 1429, relative to the insurance fraud investigation unit within4
the Department of Public Safety and Corrections, public safety services, office of5
state police; to provide for definitions; to provide for powers and duties of the unit;6
to provide for reporting; to provide relative to the Insurance Fraud Investigation7
Fund; to extend the termination date of the unit; and to provide for related matters.8
Be it enacted by the Legislature of Louisiana:9
Section 1. R.S. 22:2134(B)(3)(d) is hereby amended and reenacted to read as10
follows:11
§2134. Automobile Theft and Insurance Fraud Prevention Authority Fund12
* * *13
B. Any monies in the Automobile Theft and Insurance Fraud Prevention14
Authority Fund shall be administered only by the director of the authority, upon a15
majority vote of the board, in the following order of priority:16
* * *17 SB NO. 792
SLS 10RS-2624 REENGROSSED
Page 2 of 8
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
(3) To achieve the purposes and objectives of this Part, which may include1
but not be limited to the following:2
* * *3
(d) Conducting educational and public awareness programs designed to4
inform motor vehicle owners the citizens of the state about methods of preventing5
motor vehicle theft and combating insurance fraud.6
* * *7
Section 2. R.S. 40:1421, the introductory paragraph of 1422(A) and 1422(C), the8
introductory paragraph of 1427, 1427(1) and (3), 1428(A)(1) and (4)(a) and (C), and 14299
are hereby amended and reenacted to read as follows:10
§1421. Definitions11
As used in this Chapter, the following words shall have the following12
meanings:13
(1) "Commissioner" means commissioner of insurance.14
(2) "Fraud unit" or "unit" means the insurance fraud investigation unit within15
the Department of Public Safety and Corrections, office of state police.16
(3) "Fraud support unit" means the insurance fraud support unit within the17
Department of Justice.18
(4) "Insurance fraud" means any commission or attempted commission of19
criminal acts or practices as provided in R.S. 22:1923, 1924, or 1925 which involves20
any type of insurance as provided in R.S. 22:47.21
(5) "Insurance fraud section" means the insurance fraud section within22
the Louisiana Department of Insurance.23
(5)(6) "Insurance policy" means a contract or other written instrument24
between an insured and insurer setting forth the obligations and responsibilities of25
each party.26
(6)(7) "Insurance premium finance company" means a person engaged or27
purporting to engage in the business of advancing money, directly or indirectly, to28
an insurer or producer at the request of an insured pursuant to the terms of a premium29 SB NO. 792
SLS 10RS-2624 REENGROSSED
Page 3 of 8
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
finance agreement, including but not limited to loan contracts, notes, agreements, or1
obligations, wherein the insured has assigned the unearned premiums, accrued2
dividends, or loss payments as security for such advancement in payment of3
premiums on insurance policies only, and does not include the financing of insurance4
premiums purchased in connection with the financing of goods and services.5
(7)(8) "Insurance professional" means an adjuster, agent, managing general6
agent, surplus lines broker, reinsurance intermediary, insurance consultant, broker,7
or attorney-in-fact.8
(8)(9) "Insurance transaction", "insurance business", and "business of9
insurance" include solicitation, negotiations preliminary to execution of an insurance10
contract, execution of an insurance contract and the transaction of matters subsequent11
to execution of a contract and arising out of it, and matters arising out of any12
relationship among or between an insured, an insurer, and a third party for which an13
insurance policy provides coverage.14
(9)(10) "Insured" means any person covered by an insurance policy.15
(10)(11) "Insurer" means any person or company subject to regulation16
pursuant to Title 22 of the Louisiana Revised Statutes of 1950.17
(12) "LATIFPA" means the Louisiana Automobile Theft and Insurance18
Fraud Prevention Authority within the Louisiana Department of Insurance.19
§1422. Insurance fraud investigation unit; powers and duties20
A. There is hereby created an insurance fraud investigation unit in the21
Department of Public Safety and Corrections, public safety services, office of state22
police and the unit shall be solely dedicated to the investigation of property and23
casualty, worker's compensation, life, and health insurance fraud. The purposes24
of this unit shall be to:25
* * *26
C. The police employees of the unit shall have the same duties and powers27
as are provided for other police employees of the office in R.S. 40:1379 and such28
other duties as are assigned by the deputy secretary of public safety services of the29 SB NO. 792
SLS 10RS-2624 REENGROSSED
Page 4 of 8
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
Department of Public Safety and Corrections. The police employees of the unit1
shall complete the National Insurance Crime Training Academy, phases 1, 2,2
and 3, and Fraud Claims Law Specialist program, within the first two years of3
assignment to the unit.4
* * *5
§1427. Reports6
The insurance fraud investigation unit, fraud support unit, and insurance7
fraud section shall submit an a combined annual report to the governor and the8
insurance committees of each house of the legislature no later than February fifteenth9
of each year on the progress made in deterring insurance fraud. Such report shall10
detail:11
(1) All expenditures and receipts of the insurance fraud investigation unit,12
fraud support unit, and insurance fraud section.13
* * *14
(3) The results achieved as a consequence of such expenditures, including15
the number of notifications or inquiries received, the number of inquiries and16
investigations undertaken, the number of inquiries to which an investigation was not17
initiated, the number of arrests, the number of files presented to prosecutors, the18
number of prosecutions, the number of convictions, and the total dollar amount of19
restitution resulting from the operation of the insurance fraud investigation unit,20
fraud support unit, and insurance fraud section, as applicable to each.21
* * *22
§1428. Special assessment; creation of fund23
A.(1) Except as provided in Paragraph (2) of this Subsection, the24
commissioner of insurance may assess a fee on the direct premiums received by each25
insurer licensed by the Department of Insurance to conduct business in this state.26
Such fee shall be imposed by rule adopted by the commissioner in accordance with27
the Administrative Procedure Act. The total fees assessed for any year shall not28
exceed the amount necessary to pay the costs of investigation, enforcement, public29 SB NO. 792
SLS 10RS-2624 REENGROSSED
Page 5 of 8
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
education and public awareness, and prosecution of insurance fraud in this state1
by the programs to which funds are allocated in Paragraph (4) of this Subsection.2
The total fee assessed in any year shall not exceed an amount equal to 0.0003753
multiplied times the annual direct premium dollars received that are subject to the4
fee.5
* * *6
(4)(a) Prior to making the allocations specified in Subparagraph (b) of this7
Paragraph, the commissioner of insurance is authorized to withhold the sum of thirty8
thousand dollars per year from the fees collected pursuant to this Section to defray9
the expense of collection of the fees, enforcement of this Subpart, and operation of10
the Department of Insurance and shall withhold one hundred eighty-seven11
thousand dollars to fund the Louisiana Automobile Theft and Insurance Fraud12
Prevention Authority pursuant to R.S. 22:2134.13
* * *14
C. After compliance with the requirements of Article VII, Section 9(B) of the15
Constitution of Louisiana relative to the Bond Security and Redemption Fund, an16
amount equal to that deposited as required by Subsection B of this Section shall be17
credited to a special fund hereby created in the state treasury to be known as the18
Insurance Fraud Investigation Fund. The monies in this fund shall be used solely as19
provided by Subsection A of this Section and only in the amounts appropriated by20
the legislature. All unexpended and unencumbered monies in this fund at the end of21
the fiscal year shall remain in such fund. The monies shall be irrevocably22
dedicated and deposited in the Insurance Fraud Investigation Fund and shall23
be used solely as provided in Subsection A of this Section and only in the24
amounts appropriated by the legislature. Monies in the fund shall be25
appropriated, administered, and used solely and exclusively for purposes of the26
fraud unit, fraud support unit, insurance fraud section, LATIFPA, and as27
further provided in this Section. All unexpended and unencumbered monies in28
this fund at the end of the fiscal year shall be refunded to each insurer licensed29 SB NO. 792
SLS 10RS-2624 REENGROSSED
Page 6 of 8
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
by the Department of Insurance to conduct business in this state assessed a fee1
pursuant to this Section on a pro-rata basis based on each insurer's2
proportionate share of the total fees collected pursuant to this Section.3
* * *4
§1429. Effectiveness of Subpart5
This Subpart shall be null, void, and unenforceable on July 1, 2010 2012.6
Section 3. This Act shall become effective on July 1, 2010.7
The original instrument was prepared by Michelle Ducharme. The following
digest, which does not constitute a part of the legislative instrument, was
prepared by Dawn Romero Watson.
DIGEST
Morrish (SB 792)
Present law creates the Automobile Theft and Insurance Fraud Prevention Authority Fund
and provides for the administration and the priorities of the fund.
Present law provides that monies in the fund shall be administered only by the director of
the authority, upon a majority vote of the board, in the following order of priority:
(1)To pay costs of administration.
(2)To pay the costs of legal counsel.
(3)To achieve the purposes and objectives of the Automobile Theft and Insurance Fraud
Prevention Authority, which may include the following:
(a)Providing financial support to state or local law enforcement agencies for
motor vehicle theft and insurance fraud prevention, detection and
enforcement and for programs designed to reduce the incidence of motor
vehicle theft and insurance fraud.
(b)Providing financial support for state and local prosecutors for programs
designed to reduce incidence of motor vehicle theft and insurance fraud.
(c)Conducting educational programs designed to inform motor vehicle owners
of methods of preventing motor vehicle theft and insurance fraud.
Proposed law adds public awareness programs designed to inform the citizens of the state
on methods of combating insurance fraud and preventing motor vehicle theft to the list of
methods to achieve the purposes and objectives of the authority.
Proposed law defines the "insurance fraud section" as the insurance fraud section within the
Dept. of Insurance and defines "LATIFPA" as the Louisiana Automobile Theft and
Insurance Fraud Prevention Authority within the Louisiana Dept. of Insurance.
Present law creates an insurance fraud investigation unit ("unit") in the Dept. of Public
Safety and Corrections, public safety services, office of state police.
Proposed law provides that the unit shall be solely dedicated to the investigation of property SB NO. 792
SLS 10RS-2624 REENGROSSED
Page 7 of 8
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
and casualty, worker's compensation, life, and health insurance fraud.
Proposed law provides that the police employees of the unit shall complete the National
Insurance Crime Training, phases 1, 2, and 3, and Fraud Claims Law Specialist, within the
first two years of assignment to the unit.
Present law provides that the insurance fraud investigation unit shall submit an annual report
to the governor and insurance committees of each house of the legislature not later than
February 15
th
of each year on the progress made in deterring insurance fraud and provides
for the contents of such report.
Proposed law requires that the annual report be a combined report of the insurance fraud
investigation unit, the fraud support unit and the insurance fraud section.
Present law provides that the commissioner of insurance may assess a special fee on the
direct premiums received by each insurer licensed by the Department of Insurance to
conduct business in the state. Present law provides that total fees assessed for any year shall
not exceed the amount necessary to pay the costs of investigation, enforcement, and
prosecution of insurance fraud in the state by the programs to which funds are allocated.
Proposed law provides that the fees assessed for any year shall also cover public education
and public awareness programs.
Present law authorizes the commissioner of insurance to withhold $30,000 per year from the
special assessment fee collected to defray the expense of collection of the fees, enforcement
of the law and operation of the Department of Insurance.
Proposed law adds that the commission may withhold an additional $187,000 to fund the
Louisiana Automobile Theft and Insurance Fraud Prevention Authority.
Present law provides that the fees collected shall be used solely for the purpose specified in
law and shall be allocated as follows:
(1)75% of the fees collected shall be allocated to the insurance fraud investigation unit
within the office of state police.
(2)15% of the fees collected shall be allocated to the Department of Justice to be used
solely for the insurance fraud support unit.
(3)10% of the fees collected shall be allocated to the Department of Insurance to be
used solely for the section of insurance fraud.
Proposed law provides that the monies in the fund shall be irrevocably dedicated and
deposited in the Insurance Fraud Investigation Fund and shall be used solely as provided for
in law and only in the amounts appropriated by the legislature. Monies in the fund shall be
appropriated, administered, and used solely and exclusively for purposes of the fraud unit,
fraud support unit, insurance fraud section, LATIFPA, and as further provided in law.
Proposed law further provides that all unexpended and unencumbered monies in this fund
at the end of the fiscal year shall be refunded to each insurer licensed by the Department of
Insurance to conduct business in this state assessed a fee on a pro-rata basis based on each
insurer's proportionate share of the total fees collected pursuant to law.
Present law provides that the insurance fraud investigation unit within the Department of
Public Safety and Corrections, public safety service, office of state police, shall be null, void,
and unenforceable on July 1, 2010.
Proposed law extends the termination date of the unit until July 1, 2012. SB NO. 792
SLS 10RS-2624 REENGROSSED
Page 8 of 8
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
Effective July 1, 2010.
(Amends R.S. 22:2134(B)(3)(d) and R.S. 40:1421, 1422(A)(intro para), 1422(C), 1427(intro
para), 1427(1) and (3), 1428(A)(1) and (4)(a) and (C), and 1429)
Summary of Amendments Adopted by Senate
Senate Floor Amendments to engrossed bill.
1. Changes proposed law definition of "insurance fraud section" from the
Louisiana Automobile Theft and Insurance Fraud Prevention Authority to the
insurance fraud section.
2. Changes from requiring a separate annual report from the insurance fraud
investigation unit, fraud support unit and insurance fraud section to a
combined annual report of the three units.
3. Adds authorization for the commissioner of insurance to withhold $187,000
of special assessment fee to fund the Louisiana Automobile Theft and
Insurance Fraud Prevention Authority.
4. Deletes changes to distribution of special assessment fees.
5. Changes proposed law sunset date of the insurance fraud investigation unit
from July 1, 2016 to July 1, 2012.
6. Adds special effective date of July 1, 2010.