Meeting Packet - Insurance & Banking Subcommittee (October 20, 2021)
Summary
Meeting packet for the Insurance & Banking Subcommittee, Wednesday, October 20, 2021, in Morris Hall (17 HOB), with an agenda listing a Department of Financial Services presentation on insurance fraud and fraud prevention and an Insurance Consumer Advocate presentation. The Division of Investigative & Forensic Services slides by Director Simon Blank give the Bureau of Insurance Fraud staffing levels as 139 FTEs, 113 Sworn, 26 Non-Sworn, and describe the Fraud Free Florida initiative launched by CFO Jimmy Patronis. The Consumer Advocate slides by Tasha Carter state that insurance fraud costs more than $40 billion annually (source: FBI), and that Florida has the 3rd highest property insurance premiums in the US with an average annual premium of more than $3,600.
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“Meeting Packet - Insurance & Banking Subcommittee (October 20, 2021).”
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Insurance & Banking
Subcommittee
Wednesday, October 20, 2021
9:00 AM - 10:30 AM
Morris Hall (17 HOB)
Meeting Packet
Chris Sprowls Nick DiCeglie
Speaker Chair
The Florida House of Representatives
Commerce Committee
Insurance & Banking Subcommittee
Chris Sprowls Nick DiCeglie
Speaker Chair
Meeting Agenda
Wednesday, October 20, 2021
9:00 AM – 10:30 AM
Morris Hall (17 HOB)
I. Call to Order
II. Roll Call
III. Welcome and Opening Remarks
IV. Department of Financial Services presentation on insurance fraud and fraud prevention
Insurance Consumer Advocate presentation on insurance fraud awareness and prevention
initiatives, and consumer impacts
V. Closing Remarks
VI. Adjournment
303 House Office Building, 402 South Monroe Street, Tallahassee, FL 32399-1300
(850) 717-4870
Department of Financial Services
Florida Fighting Fraud
Division of Investigative & Forensic Services (DIFS)
Simon Blank, Director
House Insurance and Banking Subcommittee Meeting
October 20, 2021
1
i . = = = = = = = DEPARTMENT OF FINANCIAL SERVICES - - - - - - - .
Division of Investigative and Forensic Services
MISSION - To serve and safeguard the public and businesses operating in the State of Florida
against acts of fraud, arson and the misuse of state funds.
Bureau of Forensic Fire and Explosive Analysis
Dedicated to forensic analysis of evidence from fires and explosives
Bureau of Fire and Arson & Explosives Investigations
Investigates all acts associated with arson or explosives crimes
Office of Fiscal Integrity
Investigates the misappropriation or misuse of state assets
Bureau of Worker’s Compensation Fraud
Investigates suspected criminal violations of Florida’s Workers’ Compensation laws
Bureau of Insurance Fraud
Investigates all acts of insurance fraud not categorized under workers’ compensation fraud
. . . _ - - - - - CFO JIMMY PATRONIS - - - - - - .
2 -
i . = = = = = = = DEPARTMENT OF FINANCIAL SERVICES - - - - - - - .
Office of Fiscal Integrity (OFI)
Staffing levels – 7 FTEs, 4 Sworn, 3 Non-Sworn – Designated LEO Investigators 3
OFI is an individually funded specialty unit reporting to the Bureau Chief of
Insurance Fraud.
OFI investigates the misappropriation or misuse of state assets, to include;
• State contract and grant fraud
• Unclaimed Property fraud
• Theft of state property
• Electronic Fund Transfer (EFT) fraud
• State travel reimbursement, credit card and payroll fraud
• Fraud through counterfeit warrants and fraudulent debits to state treasury
accounts
. . . _ - - - - - CFO JIMMY PATRONIS - - - - - - .
3 -
i . = = = = = = = DEPARTMENT OF FINANCIAL SERVICES - - - - - - - .
Bureau of Workers’ Compensation Fraud
Staffing levels – 29 FTEs, 26 Sworn, 3 Non-Sworn – Designated LEO Investigators 20
The Bureau of Workers’ Compensation Fraud investigates suspected
criminal violations of Florida’s Workers’ Compensation laws.
• Operating Without Workers’ Compensation Coverage
• WC Stop Work Order Violations
• WC Claims Fraud
• WC Premium Fraud
• Money Service Business Fraud Schemes
BWCF has four squads, each supervised by a lieutenant.
. . . _ - - - - - CFO JIMMY PATRONIS - - - - - - .
4 -
i . = = = = = = = DEPARTMENT OF FINANCIAL SERVICES - - - - - - - .
Bureau of Insurance Fraud
Staffing levels – 139 FTEs, 113 Sworn, 26 Non-Sworn – Designated LEO Investigators 84
BIF investigates all acts of insurance fraud not categorized under workers’
compensation fraud, including:
• Personal Injury Protection Fraud
• Vehicle Fraud
• Homeowners’ Fraud
• Commercial
• Healthcare Fraud
• Licensee Fraud
• Life Insurance Fraud
• Application Fraud
BIF has five regions, each commanded by a law enforcement captain; and 19
squads, each supervised by a lieutenant.
. . . _ - - - - - CFO JIMMY PATRONIS - - - - - - .
5 -
i . = = = = = = = DEPARTMENT OF FINANCIAL SERVICES - - - - - - - .
Top Fraud Reported Types FY 20/21
1. Vehicle – Fraud associated with the misrepresentation of facts involving a motor
vehicle damage claims
2. Application – Fraud associated with the misrepresentation of facts on an
application for the purpose of obtaining insurance
3. Personal Injury Protection (PIP) – Fraud associated with personal
injury protection insurance benefits
4. Homeowners – Fraud associated with homeowners' insurance to include
hurricane related claims
5. Workers’ Compensation Fraud – Fraud associated to workers’
compensation benefits and requirements
. . . _ - - - - - CFO JIMMY PATRONIS - - - - - - .
6 -
Statistical Review
7
Statistical Review
Vehicle Fraud PIP Fraud Homeowners’ Fraud
8
Fraud Referral & Case Creation
Referrals are submitted from: Case creation:
• National Insurance Crime Bureau 1. Referrals are analyzed and entered into
the records management database
• Insurance Carriers
• Fraud Tip Hotline (1-800-378-0445) 2. Referrals are assigned to appropriate
location and squad
• Citizen complaint
3. Referrals are triaged for solvability factors
• Law enforcement partners by DIFS supervisors and assigned or closed
• Regulatory and civil partners 4. Case is investigated and closed or
presented for prosecution
5. Case disposition/outcome
9
i . = = = = = = = DEPARTMENT OF FINANCIAL SERVICES - - - - - - - .
Response to Fraud
• Implementation of two new Homeowners squads (per legislative appropriation
21-22)
• Primary focus on property and casualty
• Located in Central Florida (Orlando/Tampa field offices)
• Law Enforcement and State Attorney Taskforce approach
• Disaster Fraud Action Strike Team (DFAST) – preventive and response
• Collaboration with industry partners
• Sting operations
• Monthly intelligence meetings
• Quarterly Task Force Meetings
• Specific training related to identifying and reporting alleged fraud
. . . _ - - - - - CFO JIMMY PATRONIS - - - - - - 10
.-
Fraud Free Florida Initiative
• In response to Florida's ongoing fraud epidemic, Florida Chief Financial
Officer (CFO) Jimmy Patronis launched Fraud Free Florida, a new initiative
aimed at better coordinating collective investigative efforts to protect
Florida’s large population, especially seniors, from scam artists.
• FraudFreeFlorida.com serves as a one-stop-shop for reporting fraud and
learning about ways to protect yourself from scams.
11
i . = = = = = = = DEPARTMENT OF FINANCIAL SERVICES - - - - - - - .
Challenges to Fraud Enforcement
• Evidence gathering
• Lack of cooperation / Incomplete submission
• Complexity of Cases
• Civil vs. Criminal process
• Public perception
• Staffing challenges
. . . _ - - - - - CFO JIMMY PATRONIS - - - - - - 12
.-
i . = = = = = = = DEPARTMENT OF FINANCIAL SERVICES - - - - - - - .
2022 Legislative Initiatives
• Fraud Reporting Requirements
• Mandatory Restitution for Insurers
• Verisk/Insurance Services
• Retention and Recruitment
. . . _ - - - - - CFO JIMMY PATRONIS - - - - - - 13
.-
i . = = = = = = = DEPARTMENT OF FINANCIAL SERVICES - - - - - - - .
Questions?
Contact Information:
Austin Stowers, Director of Legislative Affairs
DFS Legislative Affairs Office: (850) 413-2863
. . . _ - - - - - CFO JIMMY PATRONIS - - - - - - 14
.-
Jimmy
Patron1s
,
Insurance Consumer Advocate
INSURANCE FRAUD AWARENESS AND INITIATIVES:
CONSUMER IMPACT
HOUSE INSURANCE AND BANKING SUBCOMMITTEE MEETING
OCTOBER 20, 2021
TASHA CARTER
Florida’s Insurance Consumer Advocate
1
INSURANCE FRAUD
INSURANCE FRAUD
• Insurance fraud [non-
medical] costs more than
$40 billion annually and
costs the average U.S.
family $400 - $700 a year
in increased premiums.
Source: FBI 2
INSURANCE FRAUD
CONSUMER FRAUD INDUSTRY FRAUD
• Stolen property that was not taken • A contractor files an insurance claim for damage
that doesn't exist or for more damage than exists
• Hurricane damage that was not caused
by a storm
• A vehicle repair company charges your insurance
• Setting your home or property on fire for new parts when used parts were installed
• Inflating the cost of a damaged item • An insurance agent provides false information on
your insurance application to obtain a better rate
• Allowing someone to use your
insurance benefits for services
• A repair person replaces your windshield and
• Falsely claiming to be injured in a
charges your insurance company when there is
vehicle accident
little or no damage
3
CONSUMER STORIES
SENIOR FINANCIAL EXPLOITATION
FRAUDULENT DOCUMENT
CONTRACTOR SOLICITATION
“The good news is we’ve got a great opportunity to get you a new one
paid for by your insurance company for the price of your 2020 “other
perils” deductible. First, we need to file a claim on the roof with the
date of loss as 4/26/20. This date was a wind and hail storm that had
winds as high as 86 mph over your home.”
4
DEPARTMENT OF FINANCIAL SERVICES
- µ~ -
“Our attorneys will then take over your case free of charge, and fight to get your
claim approved. 87% of the time in the state of Florida, insurance companies deny
homeowners roof claims. With our attorneys involved, we have been extremely
successful in flipping these would‐be denials into full payout approvals (about an
85‐90% success rate).
Keep in mind this is a completely behind the scenes process for you, the
homeowner. You will be able to sleep easy at night knowing that you have people
working everyday on delivering you and your family the settlement you deserve on
the roof.
This is an awesome opportunity for you and your family to restore one of your
greatest assets with a much-needed renovation for as cheap as it will ever be.”
5
DEMOLISH CONTRACTOR FRAUD
DEMOLISH CONTRACTOR FRAUD: STEPS TO AVOID FALLING VICTIM
• Educate consumers on how insurance fraud and, specifically, contractor
fraud works and how consumers can protect themselves against fraud
www.MyFloridaCFO.com/Division/ICA/Demolish
6
DEMOLISH CONTRACTOR FRAUD
AWARENESS IS ONE OF THE BEST METHODS TO COMBAT FRAUD
• Red Flags
• Consumer Tips
• Contractor Prohibitions
• Statistics
• Consumer Stories
www.MyFloridaCFO.com/Division/ICA/Demolish
7
CONSUMER IMPACT
UNDERWRITING RESTRICTIONS
• Age of roofs
• Coverage not offered in specific areas of the state: Central Florida
LACK OF AVAILABLE COVERAGE
• Availability and accessibility of adequate insurance coverage is decreasing
significantly
• Citizens growing by average of 5,000 policies a week
POLICY CANCELLATION/NON -RENEWAL
• The 3 most recent cancellation or non-renewal actions impacted
more than 53,000 policies.
8
CONSUMER IMPACT
LITIGATION
• DFS Civil Remedy Notices increased by 10%
• Since July 1 st , more than 6,000 notices of intent to initiate litigation totaling
an estimated disputed amount of $90 million have been filed with the DFS
INCREASED RATES
• Florida has the 3rd highest property insurance premiums in the US - average
annual premium of more than $3,600
• As of September 30 th:
o 114 rate filings with the Office of Insurance Regulation
o 51% of the rate filings requested average statewide double digit increases
between 10% and 35.7%
9
LEGISLATION
2021 L E GIS L ATIVE S E S SION 2 02 2 L E G IS LA TIVE S E S SION
Passed legislation to address: Fraud prevention legislation
• Fraud
• Solicitation
• Litigation
10
OFFICE OF THE INSURANCE CONSUMER ADVOCATE
www.MyFloridaCFO.com/Division/ICA
YourFLVoice@MyFloridaCFO.com
850.413.5923
TASHA CARTER
FLORIDA’S INSURANCE CONSUMER ADVOCATE
@YourFLVoice
11
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