Regulatory Requirements

1. Law
2. Tennessee Code
3. Insurance
4. Insurance Fraud
5. Regulatory Requirements

1. Anti-Fraud Plans.
   1. By January 1, 2002, every insurer with direct written premiums exceeding ten million dollars ($10,000,000) shall prepare, implement, and maintain an insurance anti-fraud plan. Each insurer's anti-fraud plan shall outline specific procedures, appropriate to the type of insurance the insurer writes in this state, to:
      1. Prevent, detect and investigate all forms of insurance fraud, including fraud involving the insurer's employees or agents; fraud resulting from misrepresentations in the application, renewal or rating of insurance policies; claims fraud; and security of the insurer's data processing systems;
      2. Educate appropriate employees on fraud detection and the insurer's anti-fraud plan;
      3. Provide for the hiring of or contracting for fraud investigators;
      4. Report insurance fraud to appropriate law enforcement and regulatory authorities in the investigation and prosecution of insurance fraud; and
      5. Pursue restitution for financial loss caused by insurance fraud, where appropriate.
   2. The commissioner may review each insurer's anti-fraud plan at the time of the insurance company's financial examination or market conduct examination or at any other time when requested by the commissioner.
   3. The commissioner may require each insurer to file a summary of the insurer's anti-fraud activities and results. The anti-fraud plans and the summary of the insurer's anti-fraud activities and results are not public records and are exempt from the public records act, and shall be proprietary and not subject to public examination, and shall not be discoverable or admissible in civil litigation.
   4. This subsection (a) confers no private rights of action.
2. Fraud Warnings.
   1. 1. By January 1, 2002, all applications for insurance, and all claim forms regardless of the form of transmission provided and required by an insurer or required by law as a condition of payment of a claim, shall contain a statement, permanently affixed to the application or claim form, that clearly states in substance the following, or words to that effect:

         “It is a crime to knowingly provide false, incomplete or misleading information to an insurance company for the purpose of defrauding the company. Penalties include imprisonment, fines and denial of insurance benefits.”

      2. The lack of a statement required in this subsection (b) does not constitute a defense in any criminal prosecution under § 56-53-102 nor in any civil action under § 56-53-102 or § 56-53-103.
   2. The warning required by subdivision (b)(1) shall not be required on forms relating to reinsurance.
3. Enforcement.  Notwithstanding any other law, the following are the exclusive monetary penalties for violation of this section. Insurers that fail to prepare, implement, and maintain an insurance anti-fraud plan are subject to a penalty of five hundred dollars ($500) per day, not to exceed twenty-five thousand dollars ($25,000).

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