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 InsuranceCompanies 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 AffairsNational 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