Tennessee Fraud Reporting

Definition of “Fraudulent Insurance Act"

Tenn. Code 56-53-102. Fraudulent insurance act -- Criminal violations.

(a) Any person who, knowingly and with intent to defraud, and for the purpose of depriving another of property or for pecuniary gain, commits, participates in or aids, abets, or conspires to commit or solicits another person to commit, or intentionally permits its employees or its agents to commit any of the following acts, has committed a fraudulent insurance act:

(1) Presents, causes to be presented, or prepares with knowledge or belief that it will be presented, by or on behalf of an insured, claimant or applicant to an insurer, insurance professional or premium finance company in connection with an insurance transaction or premium finance transaction, any information that contains false representations as to any material fact, or that withholds or conceals a material fact concerning any of the following:
(A) The application for, rating of, or renewal of, any insurance policy;
(B) A claim for payment or benefit pursuant to any insurance policy;
(C) Payments made in accordance with the terms of any insurance policy; or
(D) The application used in any premium finance transaction;

(2) Presents, causes to be presented, or prepares with knowledge or belief that it will be presented, to or by an insurer, insurance professional or a premium finance company in connection with an insurance transaction or premium finance transaction, any information that contains false representations as to any material fact, or that withholds or conceals a material fact, concerning any of the following:
(A) The solicitation for sale of any insurance policy or purported insurance policy;
(B) An application for certificate of authority;
(C) The financial condition of any insurer; or
(D) The acquisition, formation, merger, affiliation or dissolution of any insurer;

(3) Solicits or accepts new or renewal insurance risks by or for an insolvent insurer;

(4) Removes the assets or records of assets, transactions and affairs or a material part of the assets or records, from the home office or other place of business of the insurer, or from the place of safekeeping of the insurer, or destroys or sequesters the same from the department; or

(5) Diverts, misappropriates, converts or embezzles funds of an insurer, an insured, claimant or applicant for insurance in connection with:
(A) An insurance transaction;
(B) The conduct of business activities by an insurer or insurance professional; or
(C) The acquisition, formation, merger, affiliation or dissolution of any insurer.

(b) It shall be unlawful for any person to commit, or to attempt to commit, or aid, assist, abet or solicit another to commit, or to conspire to commit a fraudulent insurance act.

Mandatory Fraud Reporting Statute(s)

Tenn. Code 56-53-111. Regulatory requirements.

(a) Anti-Fraud Plans. (1) By January 1, 2002, every insurer with direct written premiums exceeding ten million dollars ($10,000,000) shall prepare, implement, and maintain an insurance anti-fraud plan. Each insurer's anti-fraud plan shall outline specific procedures, appropriate to the type of insurance the insurer writes in this state, to:
. . .
(D) Report insurance fraud to appropriate law enforcement and regulatory authorities in the investigation and prosecution of insurance fraud; and
. . .

How to Report Fraud

See Tennessee Fraud Investigation website for fraud reporting under the following stated conditions:

Fraud and Special Investigations Section -This Section investigates allegations of abuse, fraud, waste, and other violation of state or federal law.
This section is responsible for investigating fraud committed by licensed entities offering insurance products in the state of Tennessee. Licensed entities include but are not limited to insurance producers, agents, agencies and companies. This section does not investigate fraud committed by a consumer against an insurance company. That kind of fraud is handled by local law enforcement. Any complaint of wrongdoing by any licensed entity relating to insurance is appropriately referred to the fraud section.

The section ensures that allegations of fraud as related to the Department of Commerce and Insurance are investigated in a manner that best serves the Insurers and policyholders of the state of Tennessee. The Section functions both on a proactive and referral basis.