Committee amends fraud-in-insurance bill to send penalties to state general fund
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Summary
House Bill 2323, which creates a civil cause of action for fraudulent insurance acts and expands the insurance commissioner's access to some records, was amended so civil penalties would be deposited to the state general fund rather than to the Insurance Department's service regulation fund; the committee then passed the bill favorably
The House Committee on Judiciary amended and advanced House Bill 2323 on Thursday. The bill creates a civil cause of action for fraudulent insurance acts, grants the commissioner access to certain expunged records for licensure checks and adds automobile assigned claims plans to the statute.
Representative John Carmichael proposed an amendment to clarify where collected civil penalties should be deposited. Carmichael said he did not want the Insurance Department to have a budgetary incentive to pursue penalties as a revenue source. "I don't think it's appropriate to give the insurance department an incentive to be bounty hunters," he said.
The amendment directs civil penalty revenue to the state general fund — while allowing the department to recover investigative costs — rather than placing such penalties in the Insurance Department Service Regulation Fund. Committee members supported the amendment as a standard practice used in other budget contexts and said it would reduce any appearance of perverse incentives.
The committee adopted the amendment and then voted to report HB 2323 favorably for passage as amended.
Ending: The bill was amended to direct civil penalties to the state general fund and was reported favorably for passage.