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Report Fraudulent Insurance Laws in Georgia: Is There a Requirement to Report? – Blog about property insurance coverage



Whether it is called a "fraudulent act of insurance" or just "insurance fraud", each state prohibits certain acts or omissions that it deems fraudulent. In Georgia, the legislature has adopted the Code § 33-1-16, which defines what it considers to be a "fraudulent act of insurance". In addition, Ga. Code § 33-1-16 different degrees of reporting requirements for those who have knowledge that a fraudulent insurance document is committed

According to Ga Code 33-1-16 (a) (1), a person commits a fraudulent insurance document if he or she :

Consciously and with intent to defraud gifts, causes to be presented or prepares with knowledge or conviction that it will be presented to or by an insurer, alleged insurer, broker, or any agent thereof, a written statement as part of, or in support of, an application for the issuance or grading of an insurance, or a claim for payment or other benefit under an insurance, which he knows to contain materially false information about any factual material therein or if he conceals, for the purpose of mislead another, information on factual material thereof.

Who is required to report a "fraudulent act of insurance" under Georgian law? [1

9659005] Georgia law imposes two different positions on those who know or believe that a fraudulent act of insurance has been committed – one for those working in the insurance industry and one for those who do not. Insurers, agents and others authorized to trade in insurance in Georgia who have knowledge, or even believe that a fraudulent act of insurance has taken place, must report this to the Georgia Insurance Commissioner. In relevant parts, Ga Code § 33-1-16 (f) contains:

Any insurer, agent or other person licensed under this title, or an employee thereof, who has knowledge of or who considers that a fraudulent insurance document has committed or has been committed shall send to the Commissioner a report or information relevant to such knowledge or belief and such additional information as the Commissioner or his staff or agents may require.

Id. (emphasis added). Consequently, employees in the insurance industry have a legal obligation to report their knowledge of any fraudulent insurance documents they are aware of.

For everyone else, including policyholders, the reporting requirement is much less strict. In fact, those who are not insurers, agents or licensed for insurance under Georgian law are technically not required to report fraudulent insurance documents. Instead of using the mandatory "shall" language as it did for the insurance industry, the Georgia legislature incorporated the permissive term "may" for everyone else. Georgia Code § 33-1-16 (f) provides:

Any person, other than an insurer, agent or other person licensed under this title, or an employee thereof, who has knowledge of or believes that a fraudulent act of insurance has been or has been committed may send to the Commissioner a report containing information relevant to such knowledge or belief and such additional information as the Commissioner may request.

Id. (emphasis added.)

What is the effect of reporting or not reporting a fraudulent act of insurance?

Although it is important to understand who has a legal obligation to report a fraudulent insurance document, it is equally important to understand its effect on the person who reported the fraudulent insurance law. Even if those who are not employed in the insurance industry are not required to report a fraudulent act of insurance, an insurer or insured person may notify a law enforcement agency of that person's failure to report. In particular, Georgia law provides immunity from civil liability for defamation, libel and other causes of speech to those involved in the reporting and investigation process. In relevant parts is Ga. Code § 33-1-16 (g):

(g) Notwithstanding the provisions if) of this Code section, when an insurer or an insured knows or has reasonable grounds to believe that a person has committed a fraudulent act of insurance and as the insurer reasonably believe has not reported to a law enforcement agency in this state, then, for communication and investigation, the insurer or an agent of an insurer to act on its behalf or the insured may notify such law enforcement agency such knowledge or reasonable faith and provide such information as is relevant to the fraudulent act of insurance, including, but not limited to, insurance information, including the application for insurance; insurance premium payment registers; history of previous damages made by the insured; and other information relating to the investigation of the claim, including statements from any person, evidence of loss and notice of loss. In the absence of fraud or bad faith, no insurer or agent authorized by an insurer to act on its behalf, law enforcement agencies or their respective employees or an insured shall be liable under any civil liability for defamation, libel or related action by virtue of submitting reports or for releasing or receiving information under this section …

Id. (emphasis added). Even if an insured does not have a legal obligation to report a fraudulent insurance document, an insured's failure to do so may very well become part of an investigation by a law enforcement agency.

The moral of the story is that while Georgia law is shown to grant policyholders a certain leniency by not imposing a strict obligation to report fraudulent insurance documents, the threat of possibly being part of an investigation by a law enforcement agency for not reporting a Fraudulent insurance act has practically the same effect as imposing a strict requirement.


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