INSURANCE FRAUD TASK FORCE NAMED

Chicago, IL -- A new task force charged with examining the scope of the insurance fraud problem in Illinois was named today by Governor George H. Ryan and Illinois Insurance Director Nat Shapo. The Insurance Fraud Task Force, established with the passage of Senate Bill 359, sponsored by State Senator Patrick O'Malley of Palos Park, is made up of insurance regulators; insurance industry leaders; federal, state and local law enforcement officials; and consumer representatives.

Insurance fraud, whether committed by sophisticated criminals or dishonest consumers, is costing Illinoisans an estimated 4.5 billion dollars every year. "Through this task force consumers, legislators, insurers, law enforcement and regulators will begin to work together to address the problem," Ryan said.

"Nationally, insurance fraud cost estimates range from 85 to 120 billion dollars yearly," according to Nat Shapo, Director of the Illinois Department of Insurance. "Insurance fraud occurs during the process of buying, using, selling, or underwriting insurance and is often classified as being either hard or soft," Shapo said.

Hard fraud is a deliberate attempt to either stage or invent an accident, injury, theft, fire or other type of loss that would be covered under an insurance policy. Sophisticated conspiracies involving doctors, lawyers and their patients/clients are widespread and one of the most costly forms of insurance fraud. A single crime ring can cost the system millions of dollars a year.

Soft fraud, which is also called opportunity fraud, occurs when a policyholder or claimant exaggerates a claim based upon a legitimate accident or event. One example is a car owner involved in a "fender bender" who inflates the claim to cover the policy deductible or the cost of the insurance premium. Another example is when a claimant exaggerates the amount or value of items stolen from a home or business.

Issues to be examined by the Insurance Fraud Task Force include:

• increased public awareness to the consequences of committing insurance fraud;
• forwarding new legislation that enables law enforcement, prosecutors, and victims to seek appropriate criminal and civil recourse against perpetrators of organized insurance fraud schemes;
• and creating a system and securing funding for the investigation and prosecution of fraudulent insurance claims.

The following individuals have been selected to serve on the Illinois Insurance Fraud Task Force: Donald Pebworth, Blue Cross Blue Shield; Edward Moran, Allstate Insurance Company; Rodney Fischer, State Farm Insurance Company; Michael Parrillo, United Midwest Insurance Company; William Raines, Freemont Compensation Insurance Group; Charles Burham, Liberty Mutual Insurance Company; John Eager, National Association of Independent Insurers; Larry Barry, Illinois Life Insurance Council; Ross Silverman, Katten, Muchin, and Zavis; Kenneth Ryan, Illinois State Medical Society; Judy Fitzgerald, National Insurance Crime Bureau; Michele Ernst, CNA Insurance Company; Donna Ginther, AARP; Betty Cordial, Insurance Fraud Consultant; Arthur Hill, Cook County States Attorney's Office; Gene Saco, Cook County Sheriff's Department; Donald Whitehead, Federal Bureau of Investigations; Attorney General Jim Ryan; Director Sam Nolen, Illinois State Police; and Director Nat Shapo, Illinois Department of Insurance. Arthur Hannus with American Heritage Protective Service, Inc. will serve as first alternate.

The Insurance Fraud Task Force will report on its findings and recommendations to Governor Ryan and the Illinois General Assembly no later than July 1, 2000.