Committee adopts bill broadening insurance-fraud definition to target inflated property claims

Senate Bill 24, advanced on a committee substitute by the Kentucky Senate Banking and Insurance Committee, would expand the statutory definition of an insurance fraud act to encompass statements that misrepresent the scope of property damage or repair costs associated with a claim, sponsors and witnesses told the committee.

The change is intended to give law enforcement and regulators additional tools to investigate and prosecute fraud tied to property and casualty claims, proponents said. "Property and casualty insurance fraud is not a victimless crime," said Chris Nolan of the Insurance Institute of Kentucky. Nolan told the committee the added authority could help address a rise in fraud tied to storms and catastrophic losses and reduce premium pressure. "It's estimated that the cost to a single family each year is between $400 and $700 in increased premiums due to insurance fraud," Nolan said.

Eric DeCampos of the National Insurance Crime Bureau (NICB), testifying remotely, told the committee NICB "strongly supports Senate Bill 24," saying the measure would close state-law loopholes exploited by a minority of bad actors and provide investigators with clearer authority to act.

Committee members discussed how fraud enforcement is currently handled. Witnesses and members described an existing insurance-fraud task force that includes Department of Insurance investigators and other participants; those investigators have referred cases to Commonwealth attorneys and to the attorney general's office, they said. Committee members raised capacity concerns for local prosecutors and discussed coordination with the Attorney General's Office to handle specialized or high-volume cases.

Several senators said the committee substitute had been narrowed to target deliberate inflation of claims and to avoid criminalizing negligence or legitimate dispute over repair estimates. "Because of the changes and the willingness to make sure it's narrowly tailored to someone who is a criminal, I'm going to be supportive," said Senator Yates, describing his prior work in the Attorney General's Office and consumer-protection litigation.

On a roll call, the committee adopted the committee substitute and gave Senate Bill 24 a favorable recommendation. Those recorded as voting "aye" included Senator Rocky Adams; Senator Douglas; Senator Elkins; Senator Girdler; Senator Rawlings; Senator Smith; Senator Storm; Senator Yates; and Chair Carpenter (9 ayes). The motion and committee substitute were recorded as adopted with a favorable recommendation.

The bill will continue through the Senate's legislative process for additional consideration and potential floor action.