Transcripts For CSPAN2 Hearing Focuses On Insurance Fraud Prevention 20170818

I call to order this hearing of the Senate Subcommittee on consumer protection, product safety, insurance and data security. As the title suggests, this subcommittee exercises wide jurisdiction over a diverse range of topics. This will be our first hearing this congress to examine matters pertaining to insurance, specifically, that of Insurance Fraud. Thank you to our expert witnesses who came here to join us today. Insurance fraud is a major concern not only for insurers,we who bear the costs of fraudulent claim payouts, but also consumers, who see these costs passed on to them in the form of higher premiums. This hearing will examine the scope of Insurance Fraudst atlarge in the United States and address nationwide fraud trends across a variety of Insurance Markets, including property and casualty, and Life Insurance. In addition, well discuss the tools available to states,s insurers, and consumers to protect themselves against these crimes. The Insurance Industry has an enormous presence in the United States. There are nearly 3,000 property and Casualty Insurance Companies Across the country, and another 850 life and health Insurance Companies. Nited together, they generated over 1 trillion in premiums in the year 2015 alone. The fbi reports that the sheer size of this industry makes it an attractive target for criminals by providing ample opportunities and bigger incentives for committing illegal activities, estimating the total cost of nonHealth Insurance fraud in the u. S. To be more than 40 billion annually. Estimati that level of Insurance Fraud, in turn, costs the averageinsu American Family upwards of 700 per year in the form of increased premiums. With examples of Insurance Consumer concerns like recent news reports indicating wells fargo charged its automobile loan customers for collision insurance they did not need, this hearing is exceptionally timely. As for oversight, my staff is already in communication with wells fargo regarding these concerns, and i plan to follow up accordingly to gather Additional Information on the circumstances and what is being done to address these issues. While insurance is largely regulated at the state level, Insurance Fraud schemes can andd do lead to federal criminalat te charges, and i believe the federal government must do what it can to protect consumers from bad actors who seek to defraud them. As was a common theme among Popular Consumer scams discussed in the subcommittee earlier this year, Insurance Fraud schemes are constantly evolving and growing in complexity over time. Technology must and will play a crucial role in catching sophisticated fraud activity and i look for to learning more from our distinguished Witness Panel about the use and efficacy of emerging technologies, Data Collection and information sharing practices to better detect and prevent Insurance Fraud. Gi once again, thank you all for being here and generously delaying your august recess travel plans to be a part of this important hearing. I now turn to the Ranking Member, senator blumenthal come for his ranking marks. Be thank you, mr. Chairman and thank you for having this hearing. Before i get some very, very brief opening remarks i want to yield to the Ranking Member, my friend, senator nelson, forel remarks because he has to leave to go to the classified intelligence briefing this morning. And thank you for your courtesy, mr. Chairman, senator blumenthal. Years ago i had the hardest job, commissioner, that ive ever had in Public Service, that of the elected Insurance Commissioner of florida. Not the least of one of the challenges was the fact that we inherited a mess in the aftermath of the monster hurricane. In the course of all of those years of trying to be a proactive Insurance Commissioner, we would run into fraud quite a bit. And when i see quite a bit, i mean a small percentage of just minimal percentage of all thean insurance that is bought and sold. But when you would find it, it would be despicable, for example. We found Insurance Companies selling low value burial policies that done it for decades in the Africanamerican Community, of which they charged the Africanamerican Community r higher rate than the same policies sold in the white community. And that was a practice that had gone on for decades. Once we discovered that and busted it open, it quickly stopped. Some of those Insurance Companies have long since sold their Insurance Company toranceo others, and it was involving some of the national Insurance Companies. Individual states, not the federal government, continue to be the primary regulators of insurance. And by the way, that fact is not lost on us as we are now trying to fix the existing law onn Health Insurance as we are Going Forward because he Insurance Commissioners will have to be brought into it as to what will work in your states. And as recent as last night there were a group of 14 of us, interestingly, divided evenly between hours ours indies,the talking about the fixes that could be done, primarily through senator alexanders committee, once we get back here in september. And so its important that we consider your ideas, mr. Commissioner, and so insurance has been an issue in front of us, so much because of the dominance of the debate of healthcare. We discussed, for example, one of the experiences that we had in florida when i inherited that paralyzed marketplace of the entire state, because of the monster hurricane andrew, Insurance Companies had fled the state of florida. By the way, there happened to be a lot committed in the course of all that debacle. And one of the ways of getting Insurance Companies back into the state was to create a Reinsurance Fund against hurricane catastrophe. And that is there today with huge reserves, the florida hurricane catastrophe fund. So as we look at the question of fraud, i am very, very appreciative of you, mr. Chairman, and mr. Ranking member, that you all would hold of this. Because all it does is it hurts Insurance Companies and it hurts the people and it hurts the providers and it hurts the agents and it hurts everybody. We ought to be ferreting it outu so thank you for bringing forth this hearing. Thank you. Senator nelson, thank you for joining us. We appreciate you being here and understand other commitments and again i reckon as the senator, the Ranking Member. Thank you. Senator nelson is actually right. Insurance fraud hurts everyone,e including the Business People who were charged higher premiums as well as consumers, because of Insurance Fraud that is costly to those companies and, of course, it hurts individual consumers who are misled or deceived when they believe they are owed money for legitimate claims, and they find that somehow there is fine print in the policy, sometimes inserted or interpreted in ways they never thought possible. And thats why we are herewe are today. I hope that you will not take personally the anger and anger a frustration that i and others may express today. Your willingness to be here i think is very important, and i want to thank each of you foro being here to enlighten us and respond to our questions. But what weve seen is, for example, in connecticut, homeowners affected by a substance called parasite. Insurance companies have surreptitiously modified their home owner policies without properly telling them to exclude damage to a home foundation, once he Insurance Companies learned that those foundations had a potential and naturally ln occurring flaw as a result of that substance karyotype. The Insurance Company can effect change the policy without properly notifying theirly notif consumers. Im going to be asking questions about that occurring. Insurance companies have stalled and delay payment of claim siding obscure clauses in i policies, forcing policyholders in two protracted and expensive legal battles, just receive legitimate and rightful claims. Insurance companies have use Social Security data to cut off annuity or retirement payments upon a policyholders death buts they havent stopped collecting Premium Payments in the meantime. And just last week we learned about wells fargo forcing unwanted insurance on auto loan borrowers without their knowledge since at least 2012 through a process known as quote, forced placed insurance, end quote. I spent a couple of decades as connecticuts attorney general, and us all kinds of fraudulent schemes and the stores in testimony about misleading and sneaky Insurance Companies froma americans across my state andin connecticut of tremendous concern because at the end of the day what Insurance Companies have is most important to them is their credibility and the reputation. Ta and these kinds of instances, even if they are a handful, cost literally millions, tens of millions of dollars to ordinary consumers, and they give the vast majority of Insurance Companies and brokers and agents a bad name. I want to hear today from industry and consumer advocates about how we can hold Insurance Companies accountable for any misleading or unfair actions. I think hope todays hearing is the beginning, not the end of this inquiry and i think the chairman for having us all together today. I will be, i have read your testimony. Im going to be leaving before your testimony because i have a Judiciary Committee but i will be back for the question. I apologize for my absence. Thank you for your cooperation. We look forward to your return. I will introduce the witnesses and will take their testimony. U our first, our panel consists of the following to the honorable john doak, oakland Insurance Commission and he is tested by a bit of the National Association of Insurance Commissioners. Mr. Dennis jay, executive director coalition against Insurance Fraud. Chief executive officer Insurance Information institute, mr. Tim lynch, rector of Government Affairs National Insurance crime bureau and ms. Rachel weintraub general counsel Consumer Federation of america. Thank you all for being here today. We would begin with you, commissioner doak. Standard in all content in addition today. Hes unable to be with us thisrd morning. He prepared some remarks of introduction and i will make those a part of the record. We now turn to you for your testimony. Y. Thank you very much. Good morning chairman moran, Ranking Member blumenthal and members of the subcommittee. I appreciate the opportunity to testify to provide state insurance regulators perspective on Insurance Fraud, trent and her efforts to reduce and deter this activity. Insurance is an attractive target for fraud because detection can be challenging. Unlike bank or credit cardis accounts, consumers do not frequently interact with insurance policies. Premiums are typically paid annually and claims are filed only upon injury, death or damage to ones property. With consumers and business spending over 2 trillion on insurance per year with infrequent interactions, tempting windows of opportunity are created for criminals. Some estimates Insurance Fraudsl cost between 80 100 billion annually across all lines of insurance. 10 or more of the propertyCasualty Insurance claims may be fraudulent. State insurance regulators are attracting several trends in interest ron kirk for example, state Insurance Department had seen contractor and adjuster fraud occurring after Natural Disasters. In these instances contractors or Insurance Adjusters require advance payment from consumers for services or dance assignment of insurance policy benefits and then disappear without ever doing the work. In cases where repairs are made the contractor does shoddy work using substandard materials. In oklahoma my departments and s fraud unit deploys after disaster to assess damage and educate consumers about Fraud Prevention. Here is a photo of myself and governor fallon and state legislators with her antifraudho unit after recent tornado in elk city, oklahoma. Weve seen a scam were strangers offer to replace vehicle windshields claiming its unsafe and insurance will cover the cost. Even though the windshield is undamaged, the fraudster replaces it, files a claim on the individuals policy, it not only is the work unnecessary and the claim fraudulent but the replacement windshield may not be installed correctly leading to serious safety risk. Last, state insurance regulars are seen an increase in front of activity in the healthcare sector such as prescription drugs and medical equipment scans including unjustified claims and identity theft. These trends are deeply troubling which is why fight Insurance Fraud is one of the highest priorities of state insurance regulators. Prioriti we initiate inquiries oneses suspected fraud act so we had the authority to conduct exams to investigate. Many of the state bureaus possess lawenforcement powers and may have Civil Authority to impose fines. State insurance regulators workf with insurers and a special Investigation Unit to address suspected fraud and ensure their comply with state Fraud Prevention statutes. As part of at the front effort state insurance regulators formed an Antifraud Task force in the 1980s to coordinate this work. I serve as the current chair. I this task force, the states areo project insurance activities discuss national trends, address concern related to Insurance Agent fraud and and their authors insurance sales. We engage with consumers and interest to address antifraud issues. We crave the online fraud reporting system through whichs. Consumers and insures can report suspected fraud Insurance Departments. This provides consumers and one insures one central portal to report suspected fraud. A report made against an insured or intermediary is delivered to all states in which they do business. Es in addition, the task force is developing sources of antifraud data and look at ways to improve the exchange of information among regulators. Law enforcement come insures an antifraud organizations. The task force is developing a uniform fraud referral requirements that would require companies to submit data relating to suspected fraud to Insurance Departments. S finally, we engage in efforts to educate consumers regarding Insurance Fraud. We have resource including its fight fake Interest Program which encourages stop, call and confirm. The Insurance Agent the company to make sure the Insurance Agent and company are properly licensed before buying coverage. In conclusion, as Insurance Fraud continues to develop as state regulators will remain vigilant. We continue to adapt strategies to prevent and detect fraud in order to protect consumers and maintain insures financial health. Ma thank you for the opportunity to be here and we would be pleased to take your questions at the appropriate time. Appropriate time. You for your testimony. Chairman moran, chairman of the committee, thank you for holding this hearing on an important issue that virtually affects every consumer in business in america. My name is dennis j and im executive director of the coalition against Insurance Fraud. We were founded 24 years ago is a National Broad base of the those represented all had a hand in founding the organization with the Consumer Federation of america. Missio and to combat Insurance Fraud we also are involved in the of legislative advocacy empowering consumers to help fight fraud as well as meaningful research. You said in your opening remarks that Insurance Fraud sa specifically continues to bec a drain on consumers and businesses with the to know of tens of billions of dollars each year and committed by organized rings and professionals and lawyers and Insurance Agentss, and Home Contractors Everyday Americans and friends and coworkers and neighbors. Some of them can leave them in financial ruin or kill innocent consumers. This is a comprehensive list the way the of crimefighting community is looking to encounter them. Those that help to counter the growing threat bye establishing Investigation Units and training in technology and on a the last point, and that has been absolutely essential especially some of the schemes by the organized criminal enterprises. And that Property Casualty industry is the health care Fraud Prevention partnership. This is a collaborative effort that Medicare Medicaid that the private health plans to share Data Intelligence but to date this Publicprivate Partnership has saved over 300 million we will continue to see good things in the future but the Property Casualty insurersty are not allowed to access with this rich pool of antifraud information and that is a shame because some of those rosters ripping off the Property Casualty insurers are also defrauding medicare and medicaid and vice versa and beyond the jurisdiction of this community but at some point i Hope Congress will take a look and we can resolve that at some point. At the state level state legislators have come to the table with very responsible antifraud initiative is. With those specific fraud statutes and 38 states have established antifraud units that investigate and prosecute many with police powers. Many have prosecutors within their departments but there is day highlevel of collaboration and when they do require them to report fraud. And after 20 years of increasing efforts and to work their way out of this problem. And as the commissioner and mentioned this is vital to alert consumers to those scams that can impact them impat and also held otherwise honest people that there is a heist to pay for committing Insurance Fraud. But these programs are powerful in we need many more of them. We need social media to engage consumers directly and help to educate them and that social media facebook and twitter. They communicate with them also. Ave an so that acceptance oft. Unethical behavior is increasing across the country. And help to counter some of the trends. In conclusion, we have come a long way in recent years with the federal government to combat fraud and we need to be proud of that and understand we are a long wayve from turning the corner on Insurance Fraud but what we see through continued collaboration efforts willin continue down the path with the associated costs to save all americans money. Thank you. Thank you very much Committee Members i appreciate the opportunity to address you about Current Issues with the Insurance Industry. And how they can protect themselves. They paid out more than 327 billion in 2015 to settle claims this will undoubtedly be the case since 2017 the Insurance Companies see they are legitimate and paid out promptly so they receive their highest ranking ever. The relationship between insurers is trust that willtr help to rebuild after catastrophes happen making sure its accurate and honest unfortunately there is damaging consequences for the consumer end Insurance Company. They paid out as much as 30 billion, a 10 of allne claims for fraud. Resulting in all consumers having to pay higher premiums. This puts a strain in theer relationship they are dedicated with never a can to prevent fraud and five years ago since the late release of fraud study they have dramatically improved their efforts in we hear that today and to allocate Additional Resources whether special Investigation Unitsoday. Or trading and every state department has in house fraud bureaus getting results. Aside from what we heard inhous commissioner jones has issued nearly one is in use news remote releasess andh those cases included fraudulent claims for those that were under siege oror never happen dirty the with Worker Compensation claimsauto or the jobs they undertook are misrepresented. Ted. So one of the things that is interested is that all of these are devolving as Technology Improves the ways they are more sophisticated. And increasingly they want to buy their insurance policies and have a claim through their smart phone and how can they verify all of this . For chile this is where the industry is increasing Artificial Intelligence to help delivery and reduced cost. St. And digital lahood kagan bring benefits. A report released last month by the quantum based that they recognize their efforts with their finding in these efforts are creating optimistic results with d negative aggregation verification or analyzing the data with Artificial Intelligence. The result is they have the Technology Tools they needtechno there will always baa Human Element and that is hermb plays a rule a role they must make prudent Financial Decisions were proud of the role we play to keep consumers informed. Thank you for the opportunity to be before you today. Members of the committee and mr. Chairman of the director at the Insurance Crime Bureau a national notforprofit organization to write about 80 percent of the Casualty Insurance premiums were led by a retired Lieutenant General in the u. S. Air force. Legislators regulators andw lawenforcement investigate criminal groups to commit Insurance Fraud. With 105 year history of cooperation and help protect from the organized criminal rings. Those of our multi a claim perpetrated like organized groups with those aggressive means of investigation withio training and Public Awareness with the most egregious forms some of the schemes we see vehicle crime , a theft just to dave a few i will focus on the three areas of medical fraud in vehicle crime as contractor fraud. Several years ago i aad committed to devoting more frsources due to pollution and other Health Care Providers since 2002 has02 opened eight task forces in there is a chicago and houston, new york and in fairfax north virginia. Reach and asked to serve on the executive board under the u. S. Department of health and human services. We know from experience there is a significant amount of crossover in the private Health Insurance. Focusing on the model is working to share data in with potential criminal activity. For example, hard Data Analytics team prepared over 900 Million Health care claims data. Data with over health care so these rings dont discriminate. The v scylla that dates back to the founding whether intact or illegally exported or shipped overseas in the u. S. Often they dont know they might be stolen. The with the black market Enterprise Congress itself recognizes in the 1992 legislation and the purpose is to help protect consumers. This program administered it reduces the use of stolen vehicles and provide consumers protection. Bissett is intended to make sure it is available to consumers. Finally another issue wherere we have seen an abuse and contractor fraud. We see numerous cases of exploitation so those areas impact is serious damage to homes often beset within a date or tarot involving 20 contracts in filing bogus claims and they also are prevalent as they collected down people from people several states including oklahoma and we have worked with the commissioner for billboard social media so thank you for the opportunity to be here. Welcome back. Thanks Ranking Member i appreciate the opportunity to provide a Consumer Federation of america as prospective. I have reached the general counsel as a Nonprofit Association of 280. Consumer groups founded 1968 and is concerned about fraud by consumers against the industry costing consumers dearly. Although most are honest and ethical it is a serious problem. When they raise premiums for a necessary coverage or by a insurance priced at aeq discriminatory manner misleading policy language make them believe they are purchasing protection theyey will never received with unfairly denied claims that take too long. Using fake engineering reports after superstormin stan superstorm standee. And with those Auto Insurance auto loans medicare vantage insurer settled up 32 million with the insurer exaggerated. Cfa has undertaken a series of reports that our unableg to move afford from those unrelated income factors that lowincome people take more and they were a defrauding of American Consumers charging more than the unsafe drivers. Than un five against the Insurance Industry is a serious issue with two types of Insurance Fraud. There ar that is somewhat deliberately planning the collision and auto theft or fire criminal agreeing as are involved stealingce millions of dollars. Ta on the fraud consists of policy holders existing legitimate claims. When involved in a collegian bangladesh collision with more damage they and what occurred. But the likelihood to commit fraud in period appears to be impacted holidays cd Insurance Industry treatment that perception is very negative and if they can repair the image to positively impact of fraud against it. Include a the creation of the investigative units too looking into suspicious claims however those attempts must be reasonable and must not go on for extensive period so people cannot return to their homes. In conclusion we are concerned about Insurance Fraud but for those who are on the stand of the coal they should consider those frauds committed in the Insurance Market and those seeking claims payments. Let me ask a few general questions that i will turn to the Ranking Member. Our states share a similar casualty for the insurance claims to be paid and most recently fighters with those most significant opportunities for fraud . We had talked about this and actually attended the national tornados segment but there is a high propensity for fraud the most to have take advantage of that White Katrina or sandy those are seniors that we want to protect to make sure they are well educatede but we also see the basic things that scalable catastrophe of more tornadoes with 80,000 claims in a concentrated area and the antifraud units from the state of North Carolina coming to join the us those that go through thee neighborhoods that prey upon suspecting consumers that have never had this size of catastrophe so those that are asking them to put names on their property then find out later there is a lien on the of property with the unscrupulous contractors whether a complete or partial lost and are many things that happen but consumers at that point and a just recently shares to the picture of health city in but we try to encourage them to use for local reputable contractors so they know who they are so when they come across statekn lines that is when you see that happening. Somebody that enters into a contract following a Natural Disaster how was that Insurance Fraud compared to fraud . When theyre actually doing work that is where it crosses the line into the insurance issue. If we so maybe that is the first dollar with that and in the major catastrophe in his all of those and are applied to the total insurance claim. More which is the best of the practice that come intoti an area and we believe that should be done at the local community level. Or somebody comes from out of state day register at the local municipality it is very economical to show they live Liability Insurance that they are on that property and there is recourse. There are things we have learned from other communities around the of states for best practices. U raising the topic of fraud committed by the Insurance Company perhaps stereotypically the we think of third party as the perpetrator and have to see what do you take thosed arei seriously that the insurancewi companies and then and in the ethical way. Absolutely. The Insurance Commissioner m whenever there are complaints they take those very seriously and insurancend fraud if there is un client unfair claims practices were using a practice behind the scene, that is something state regulators take very seriously other colleagues may have comments but that is very high on our radar. When we hear those we investigate and followup. Is there a way to an estimate . Maybe as the industry you representative but it is something to take and theyre working very closely and all policies enough to believe but there is a very direct relationship the four insurers want to get this right providing the rightt protection so if we look at sandy the First Six Months 90 percent of the claims were paid. We can look a specific instances where we had trouble in the industry will find those but the vast majority is didnt dedicated that is but a lot of these are perpetrated by the road the Insurance Adjusters and agents. Now one time they did not do very good job policing their own employees. That has changed because of pressure with the regulatory bodies and also because the insurers best interest that they do want to make sure that they are protected. In those areas it is Getting Better but in these other instances taking a look at, you distinguish between a bad practice on behalf of the Insurance Company and what may be deemed criminal or civil fraud so we need remedies for both some baby abuse or outright fraud. I can see that frustration or the bureaucracy that comes with filing the claim that that denies them there due. Thank you very much. Thank you very much to all of you to talk about an issue that is of grave concern all over the northeast and the country and it goes by a specific name and not many air around the country would know about it but it is wellknown in connecticut and massachusetts in the northeast says an example of the kind of insurance practice that is tantamount to fraud and unfortunately has cost hundreds of connecticut homeowners possibly their life savings and hundreds of homes ofly wor working and middleclass families have cracking or crumbling foundation. Those are declaiming in value to the point of worthlessness the alleyways to repair the entire foundation with the fear it could spread to thousands of other homes whose foundations were also poured using concrete aggregate containing high levels of a naturally occurring mineral. But insurers are unwilling to provide desperately needed assistance to the homeowners and instead of alerting their customers about the risks once they became aware, they surreptitiously changed the policy and updated thehe policy to strictly coverage of collapse and abruptly collapsed and added foundation as a policy exclusion. They never properly told them what theyre doing. Endeavored to the of the reason there were doing it themt adequately notified them so that homeowners could take steps to protect themselves either by rebuilding or taking constructive precautions or new policies they knew there was a problem before the homeowners new butng immediately thought ratherect ti than protect themselves they protect their customers. I have highlighted the responsibility of the insurers and some have offered the most have refused to step up and honor their obligation and i about of patients. I think the nra colleagues are a point of wanting more action whose life savings are at risk whose homes are not over a crumbling so when they become aware of the problem so dont they have an obligation to inform their consumers . There with that type of policy. And to pay very close attention and we understand people are very troubledrt financially as a result of this is this something that happened of construction and manufacturing occurring 15 years ago it and as a homeless policy it is standard even in other states is a standard include exclusion. Really know of this particular issue in connecticut. I just mean changing policies and to rob home owners of their life savings. E that is the practice among insurers so youre telling me so that is wider. And with those the is the standard conclusion of the homeowner policy talking about the regulation of all policies toward changes are approved by the regulator to make scheerer what those changes are fed his end unfortunate situation and everybody wants there to be a solution if it was intentional. This is the reason people buy insurance and of order specifically. That is to cover the risk to make sure people understand how that insurance works and that is not a Homeowner Insurance issue but it does not fall to that insurance policy. Ng to does that make it your blood boil . . That is the unfortunate. With a the 4. 4 earthquake last night in oklahoma. Those foundations of particular issues relative to seismic activity but with earthquake insurance much like what you talk about i do do agree that to me personally is more thanhi commercial risk exposure but those. But i would want to make sure you understand whatre happens here. Is as though the insurers in your state of oklahomaahoma figured out we have earthquakes in oklahoma so we will change the policies because it could mean a lot of losses but were not going to properly inform consumers so they will wake up today with the damage a go to their policies and they will tell them we change that. Butted dizzily april in the ldp year that is the equivalent the lack of proper notification. Exactly. And then to have an obligation to do better. And those disclosures and they should be educated on that to of a consumer board of trustees on Consumer Education most never be their policies before there is every claim that they ever get these endorsements based upon the changesitions summer changing but they are not read. Fare not getting the proper disclosures i agree. But in my view there is a v question those were totally inadequate it is unconscionable and indefensible and there is always adequate redress. And to support those because as i say i have lost with other sources of recourse those that have stepped up to recognize their obligations but they rightly insist so it does not fall unjustly on those who want to do the right thing so use your moral suasion soever they does the right thing as an important example of moral and legal responsibility i hope we have a second round of questions. Im i do have questions in the allies of the tornado issue and fled catastrophes i know they there were tremendous floods with those life altering kinds of things. But a lot of Property Damage how low do you recommend with Public Service with the emf or feed the to facilitate those conversations . How do we informed them that americans will not be bright with those issues like contractor fraud or Insurance Fraud. One of the things that they have done very well as many different types of Consumer Education at the state level ministates put to get there psa fed different types two and drive the message at the local level to an initiative the claims but that because those same principles apply maybe when they have that catastrophicat event coming it is very challenging that is the relationship with the insurers expect them to provide that education and those marketing pieces but i do agree where they have been totally devastated and they dont understand the cleans processes. Met with the flood the first inclination is to get everything out. But i kept saying document every single thing all the things that you were such a panic in the first 48 hours. Ay e what they have put together as the effective tool is the Home Inventory we try a to encourage that to take pictures of your a pi. A picture is worth a lot of money five flood or wild fire but the state of West Virginia unfortunately has a high use or we have been hit hard with some pain clinic doctors indicted on fraud charges. You so how do you approach this . In terms of insurance, how can we be helpful in this area . Across from West Virginia our hearts go out to all the people that are suffering as a result and i think but to find ways to you tackle a mounting problem and working with government and others but also they could be a part of the problem with this year for eight injections some insurers try to do the right thing by limiting the opioids they should be able to obtain but sometimes in some have been on a drug for so long that they have of much less safe alternative. And that exacerbates the problem. Cated is excellent. And the prescription and Monitoring Program to recognize if they share the data with pitchers those that can find in those schemes much more quickly that just doctor shopping but those physicians that are prescribing those that are dispensing these drugs like giving candy on thest street. Those of the people we have to shut down first. Because there is aar pharmaceutical system if theyre going to the pharmacy uses the insurance card there is a certain percentage who pay cash in some states are not required to input that data into that system because the kidsnk things to those Insurance Companies but if they pay cash it is much more difficult to their workingng together how to close that loophole and for a long time there were not cooperating with one another. So that problem is gettingr better we have to have everybody at the table forh the report that just camet out. Servitude to zero the colleagues expecting votes around 11 00 my intention is to conclude and will notto resume in that they would be submitted in writing. In so let me say in regard to your legislation be glad to hear more about that. And to have a role in federal legislation. Wait we have had a Health Care Debate one of the things missing in this conversation for a long time is what do we do to reduce the underlying cost of Apparel Health care . Andbe to get rid of the things i that drive up the cost of health care. One of the things is medical Insurance Fraud which is committed by the provider as well as the patient or consumer. Are above to note that information of the overall cost for that kind of fraud and what it creates. Regar and that the cost of health care. This is directed initially to you there is a 2016 study conducted by the coalition i ask unanimous consent there may part of the record without objectionrt of that report it highlightsinsa to highlight Insurance Fraud social media searches in the database and i would like to w hear how we can combat fraud has be said before sospect fr tool but cover these suspect fraud schemes has exploded. And as more players in the propertycasualty industry utilizes. And everybody focus is on that right now. Had a and to do a briefing at the annual meeting in december raised a gentleman was charged with arson burning down his home. He happened to have a pacemaker implanted in his chest the prosecutor got a court order to force him too sit so they could take the data off of the pacemaker which demonstrated what he said could not have happened ro and the court just ruled the data can be used in court. I thk that is an extreme example we have a lot of these examples come forward with the privacy of americans and when is going too far even with criminal fraud schemes . D another in arkansas was a murder case to look at the data in the amazon as far asay maybe you all these devices to maintain in a cloud and basically a woman drowned in the hot tub but they got the data even though amazon tried to squash that. T so this story that he told about her death was not true. As homes of more computers looking to the internet there are cameras everywhere in society so thata generation comingofage ande, thatd say separate issue but that helps Fraud Investigation and that will only continue. Just forming an innovation and task force over the last several months wea listening to the emerging technologies and all different areas highlighted thah that is something the of regulators they will stay on top of whether cyberissues or the Big Data Working Group schley will give you t assurances that is focusednd on the emerging technology. We see evidence in the Crop Insurance where big data can find information teout fraudulent behavior and you have testified todayan in that one area for thoses same individuals perpetrating those criminal activities elsewhere. Does Law Enforcement have the tools necessary . Are they behind the curve . Lead partner with those tools of investigations. So those regulators through proper procedures we are to a provide day and consistency that could be seeking some of that data that is proprietary to move an Insurance Company. At the very early stages of working we can get into these communities earlier than most and to help policyholders. I would like to add with those lawenforcement and to address it to more but there should always be Consumer Protections as well. With the use of big data than and with those other factors or other aspects that are not related to save driving to be used with that discriminatory impact with low income consumers taken into account. I will be as . As possible with the chairmans position if we could take a break and come back to see how far we getoutsei if you are available for another 20 minutes . What you are seeing of drinking member trying to supersede the chairman. Rm [laughter] so let me see if i can conclude before we go to vote. Im sure you have seen the 60 minutes peas on peace on audits leading to life Insurance Companies being discovered to uncovered a systematic industrywide practice if there was a policy and it is not uncommon as they routinely use Social Security master file but only to their advantage to cut off annuity payments once the policyholder has died. When it came to life and that they have no idea a policyholder has died that Life Insurance premiums that they put the burden to come forward and often they had no idea the policy existed in the use that ignorance to its benefit. They have the acknowledged their responsibility settling litigation with 35 that have not done so and when one of the of colleagues was asked he said he would release the hounds of hell because they were failing to pay benefits and that misconduct was absolutely fraudulent. And i would like to ask you what you are doing to prevent this kind of fraud . Of i did have the opportunity to see those segments with the work that was done with the settlements basically run by lead states so one of the issues that was recently put together was a lost lifey policy Locator Service that was pioneered in a couple of states and for the record werd provided an update on the actual steps of the findings of the beneficiaries and i appreciate that because were continuing to work of those settlements and the commissioners highly respected. To have mac and ask your permission to put together information on the update for those 35 ensures a follow up on that. It is a high priority. We are having success in other areas relative to finding beneficiary. Thank you. Mr. J . I agree with the commissioner as first its a regulatory issue, and administrative issue for the Insurance Departments to oversee. To my knowledge in taking a look at the Companies Involved in it, theres no criminal fraud. It may come in the realm of abuse, or certainly bador practices on part of the life Insurance Industry for notwhen n proactively trying to find when benefits are deemed to be do. But, we support the Insurance Commissioners us first their actions on the issue. E well, perhaps in your for the response right question you can tell me what you are doing proactively to prevent this kind of practices in the future because, as we know this kind of practice may not have constituted criminal fraud, although as a former prosecutor i would have been interested to investigated this criminal wrongdoing, Kevin Mccarty the insurance prosecutor probably doesnt have jurisdiction but i would expect that criminal thirtys would have an interest in. We would support any attorney general Insurance Commissioner fraud bureau to investigated. If they do find there are criminal violations there, to prosecute to the fullest extent of the law. T know now, it has not happened so far. I would make a comment that through the process one of the things i would like to know about the lost life policyhad th Locator Service is once these policy benefits, and we have had an opportunity to find these for oklahomans, its an oppressive chart since its been rolled out from the naic in assistingneic consumers. But when the National Association of Insurance Commissioners like bike in a oklahoma, there is no charge to them, no reduction in thosem, ne fees. I believe under some of the other circumstances through the treasures departments that there is a fee redacted. In my opinion, thats wrong thing to do. Consumers should get 100 of the money. I have a couple of more brief questions. To demonstrate my firmnessbu but also my accommodation the floors holding the vote open for five minutes. You can wrap up in the next five minutes we will both accomplish what we want to. Operatio this is bipartisan cooperation at work before your eyes in realtime. E reco i will have more questions for the record, its very important to me. I want to commend theo commissioner of florida and your colleagues who have joined in the task force for exposing this fraud. I dont use that word lightly. It is fraud. Tr exposure that provides a tremendous warning to others to avoid this fraud. I think you and me having responsibility their sisters,d brothers, children and their spouses are going to rely on it to survive, to live. A and to reap the benefits of that life. A lengthy article in the New York Times detailed a new a disturbing trend in the whole life industry. Im sure you are aware of it. Insurance companies have jacked up premiums on whole are universal life policies and shifted the burden of Dividend Payments from Insurance Company to other policyholders. Those who bought in the 80s and 90s some which guaranteed 4 or more forcing their premiums now soar. So, the new rates have left many Older Americans with no choice but to drop coverage and lose the entire value of their policy, after years and years of investing in it. I am raising this issue, i know we are not going to have finalsw answers today, but i want to ask, realizing many whole life policies were underwritten a during a decade of high Interest Rate that could support more generous dividends, understand these policies give a guarantee and policyholders have kept their side of the bargain by these increases in premiums where they justified or away from Insurance Companies to reduce liability and eliminate the most expensive policies. I understand they are expensive. But, dont they have an obligation to do better . It seems unfair to a consumer who has been painted to the policy and then only to find that it is unaffordable and they cant get the benefit of what they been paying for. Ntirel certainly that has an unfair result on the reason whyan insurers have insurance to begin with and being unable to use it in a way they have been paying for for years is problematic. I would recommend more research looking into how the effect that it has on Older Americans and their ability to obtain coverage and the investment they put into it. Thank you. I invite other responses. Thers a perhaps others can answers that same question for the record and my thanks to the chairman for the generosity indulgence. Than i will close by thanking you from the National Association of Insurance Commissioners, the regulators we believe that state based regulation is the best place for insurance. Where the closest place to the consumer. In my state we have been regulating insurance my colleagues i represent our proud of the work they do protecting consumers. We appreciate the opportunity to be here. E. This is a very, very timely topic and evolving topic relative to new try trends in fraud. Thank you for having us. If i might make one concluding remark. I set exactly where you are, i dont know if it was five or six years ago, on a panel i think if that were mr. Jay is now. Into my right was the attorney general of new york who argued that insurance regulation should be turned over to the federal government. It has been, as you said quite correctly a state to role and responsibility. I said, no. Insurance regulation should continue to be a state responsibility. But, i said that the states have an obligation to do better, to be more rigorous in their oversight and scrutiny. I would hope they would be, because i will continue to be an advocate of state regulation. Thank you. I hope that we can work togethea and improve the efficacy of that regulation. I appreciate the cooperationm and the witnesses testifying. The record will remain open for two weeks remembers to submit questions. I will have some. It appears that Ranking Member well. My guess is other colleagues we would ask you to respond. We thank you for your presence today. [inaudible] [inaudible] cspan, where history unfolds daily. 1979, cspan was created as a Public Service by americas Cable Television companies. Its brought to today by your cable or satellite provider. Next, a discussion on Health Care Costs for employers. The president and ceo of the National Business group on health presented the results of his organization survey of what employees think about overall healthcare costs and ways they want to improve the value of care