Draft Pending Adoption

© 2016 National Association of Insurance Commissioners 1

Draft: 9/9/16 Antifraud (D) Task Force

San Diego, California August 27, 2016

The Antifraud (D) Task Force met in San Diego, CA, Aug. 27, 2016. The following Task Force members participated: Wayne Goodwin, Chair, represented by Shane Guyant (NC); John D. Doak, Vice Chair, represented by Brian Gabbert (OK); Lori K. Wing-Heir represented by Chris Murray (AK); Allen W. Kerr represented by Carder Hawkins (AR); Dave Jones represented by Martin Gonzalez (CA); Katharine L. Wade represented by Kurt Swan (CT); Karen Weldin Stewart represented by Franklin T. Pyle (DE); Ralph T. Hudgens represented by Margaret Witten (GA); Dean L. Cameron represented by Lori Braseth (ID); Anne Melissa Dowling represented by Brett Gerger (IL); Stephen W. Robertson represented by Tina Korty (IN); James J. Donelon represented by Matthew Stewart (LA); Daniel R. Judson represented by Rachel M. Davison (MA); Al Redmer Jr. represented by Nancy Grodin (MD); Patrick M. McPharlin represented by Jean Boven (MI); Mike Rothman represented by Michael Marvin (MN); John M. Huff represented by Carrie Couch (MO); Mike Chaney represented by John Hornback (MS); Adam Hamm represented Jeff Ubben (ND); Bruce R. Ramge represented by Peg Jasa (NE); Mary Taylor represented by Michelle Brugh Rafeld (OH); David Mattax represented by Mark Einfalt (TX); Todd E. Kiser represented by Armand A. Glick (UT); Jacqueline K. Cunningham represented by Mike Beavers (VA); Mike Kreidler represented by Jeff Baughman (WA); and Michael D. Riley represented by Andrew Pauley (WV). Also participating Brian Maynard (KY) 1. Adopted its 2016 Spring National Meeting Minutes Ms. Grodin made a motion, seconded by Mr. Stewart, to adopt the Task Force’s April 4 minutes (see NAIC Proceedings – Spring 2016 , Antifraud (D) Task Force). The motion passed unanimously.

2. Adopted the Report of the Antifraud Training and Seminar (D) Working Group Ms. Rafeld said the Antifraud Training and Seminar (D) Working Group will be scheduling an advance training that will be presented at the Fall National Meeting. She said the training, which is called “Portrait of Fraud: Are Insurers Properly Recognizing the Graying of America,” is intended to shed light on the fact that numbers of the baby-boom generation could have a rise in committing fraud in areas including retirement funds and real estate. Ms. Rafeld said if the training is a success, then it will be provided through a webinar. Ms. Murray made a motion, seconded by Mr. Pyle, to adopt the report of the Antifraud Training and Seminar (D) Working Group. The motion passed. 3. Adopted the Report of the Information and Technology (D) Working Group Mr. Glick reported that the Information and Technology (D) Working Group met via conference call on Aug. 12 (Attachment One). He said the Working Group has two outstanding Uniform System Enhancement Requests (USER) that are currently at different stages of the USER form cycle. Mr. Glick said the Working Group discussed USER Form 109, a request to expand the search functions currently found in the I-SITE report, which will provide a more dynamic reporting. He said the search functions will include last name, first name, business name, alias names, email addresses, date of birth, Social Security number (SSN), physical address, phone numbers and driver’s license number. Mr. Glick said this enhancement is scheduled to be implemented by October. Mr. Glick said the Working Group discussed USER Form 111, a request to add the capability of attachments for the Online Fraud Reporting System (OFRS). Mr. Glick said the enhancement request is currently at the preliminary detailed analysis stage. Mr. Glick said in order for this request to move forward, the Working Group needs to determine the capabilities of the attachments function. The capabilities in question include the type of file formats allowed, the file size limitations, the retention periods for the information submitted and the security measures for accessibility. Mr. Glick said to assist with these questions, the Working Group has reached out to the National Insurance Crime Bureau (NICB). The NICB recently completed an attachment pilot project with the New Jersey Department of Banking and Insurance fraud department. Mr. Glick said the NICB will work with the Task Force and National Association of Insurance Commissioners (NAIC) to determine the parameters for this new enhancement. Alan Haskins (NICB) said the fraud referrals are sent into the NICB/Insurance Services Office (ISO) database, and then they are directly sent to the state fraud departments for review. Mr. Haskins said the pilot project allowed the referrals to accept

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Draft Pending Adoption

© 2016 National Association of Insurance Commissioners 2

attachments for the purposes of providing additional detail that is not found in the basic referral process. Mr. Haskins said the attachment enhancement has limitations regarding the number of files that can be submitted with one referral and the size of each file. Mr. Haskins said the pilot project proved to be a success and that the NICB will assist the Task Force as it works towards creating this enhancement to the OFRS. Mr. Glick said the next step in the process will be for the Working Group to meet via conference call to finalize the capabilities. Mr. Glick said the details will then be presented to the NAIC Information Systems Department to complete the detailed analysis. Mr. Glick said the NAIC would then present the Task Force with recommendations to move forward. Mr. Glick said the Working Group was tasked with further reviewing the proposal for a fraud prevention plan repository. He said a short survey was distributed to the fraud directors to determine uniformity with the state requirements for the companies to submit a fraud prevention plan. Mr. Glick said the survey received a low state response. However, he said the information received indicated that a majority of states that provided a response require the fraud prevention plan to be submitted. Mr. Glick said to determine the specifics for this proposal, the Working Group requests that states that currently require a fraud prevention plan become an active member in the discussions moving forward. Mr. Glick said Ms. Rafeld has volunteered to lead further review of this proposal and to work with NAIC staff to gather additional data regarding state requirements. Ms. Rafeld said there will be an outreach to the remaining states that did not respond to the survey to confirm additional states that require companies to complete a fraud plan, in addition to the states that require the fraud plan be submitted directly to the state. Ms. Rafeld said the group will also reach out to industry to get the companies’ perspective on this proposal. Ms. Rafeld said this information will be presented to the Working Group prior to the Fall National Meeting. Mr. Glick said once the capabilities of the proposed repository are determined, the information will be presented to the Task Force. The proposal will then be presented to NAIC Information Systems Department for detailed analysis to be completed. Mr. Guyant said to be clear, the intent of this proposal is to create a repository for companies to place their fraud plans in one location that can then be sent to all states that they do business with. Mr. Guyant said there have been concerns regarding the security and confidentiality of these reports being submitted into this type of repository. Mr. Guyant said the Working Group and Task Force are cognizant of these concerns and will make sure the proper security measures are put in place. Ms. Rafeld made a motion, seconded by Mr. Glick, to adopt the report of the Information and Technology (D) Working Group, including the Aug. 12 minutes. The motion passed.

4. Heard Reports from Interested Parties

a. CAIF

Howard Goldblatt (Coalition Against Insurance Fraud—CAIF) said this year, the CAIF has noticed a rise in workers’ compensation premium fraud schemes and working with states to fight this type of fraud. Mr. Goldblatt said the CAIF continues to work with states to enact counterfeit airbag laws and plan to continue their state outreach into 2017. He said the CAIF is working to finalize a rate evasion law that targets out-of-state “garaging.” Mr. Goldblatt said the CAIF has created a public application (app) for smart phones—called Insurance Fraud Wire—available through iTunes.

b. NICB

Alan Haskins (NICB) said the NICB has been working with the state of Louisiana during the devastating flooding currently taking place. Mr. Haskins said the flood damage will bring many different types of insurance fraud, including auto claims, property claims and contractor scams. Mr. Haskins said the NICB has completed public service announcements (PSAs) to assist consumers who have experienced damaged property due to the flooding. Mr. Haskins said the operational side of the NICB has reviewed 2015 data, and the findings show that there has been a significant increase in commercial and casualty type claims concerning medial fraud claims and personal injury protection (PIP) fraud claims, with a decrease in vehicle and property type claims. Mr. Haskins said the New Mexico Vehicle Crime & Insurance Fraud Summit will take place Oct. 12 in Albuquerque. It will focus on vehicle crime—specifically, chop shop issues, staged accidents and prosecutor resources. Mr. Haskins said the NICB’s plans for 2017 will be to focus additional resources to state fraud departments with additional designated fraud prosecutors.

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© 2016 National Association of Insurance Commissioners 3

5. Heard an Update on Federal Legislative Matters Brooke Stringer (NAIC) said the Federal Trade Commission (FTC) has issues an alert on scams that cite the recent flood disaster in Louisiana. These charity scams take many forms, including emails containing links or attachments that direct users to phishing or malware-infected websites. Donation requests from fraudulent charitable organizations commonly appear after major natural disasters. Ms. Stringer said the U.S. Securities and Exchange Commission (SEC) received a letter from Senator Claire McCaskill (MO) and Senator Susan Collins (ME) on behalf of the Senate Aging Committee with a recommendation to create a single website for seniors to discover whether a person selling a financial product is licensed and if they have ever been sanctioned. Ms. Stringer said the letter from the Aging Committee chair and Ranking Member points out that there is no single database for insurance agents or municipal advisors, but they would like to learn more about the challenges in building a federal database. Ms. Stringer said the NAIC members do retain lists of licensed insurance agents, and in some states, those are public lists. However, there is no comprehensive searchable list for every agent. The SEC reached out to the NAIC about the database recommendation to learn more about what is currently available with regard to information regarding insurance agents. Ms. Stringer said the U.S. Congress is exploring legislative solutions to help expose senior financial exploitation and protect vulnerable seniors. She said legislation has been introduced by Senator Susan Collins (R-ME), Senator Claire McCaskill (D-MO), Representative Kyrsten Sinema (D-AZ) and Representative Bruce Poliquin (R-ME) named the Senior Safe Act (S 2216/HR 4538). Ms. Stringer said this legislation would provide liability protections for financial institutions (including insurers) and their employees who report suspected senior financial exploitation, provided they are trained in how to identify and report such financial exploitation and their reports are made on a reasonable basis. Ms. Stringer said on July 5, the House of Representatives approved HR 4538 by voice vote. The Senate sponsors are working on some potential language changes to the bill, and it could be taken up the Senate this fall.

Having no further business, the Antifraud (D) Task Force adjourned. W:\National Meetings\2016\Summer\TF\Antifraud\National Meeting Material\Minutes\4-AntifraudTFmin.docx

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© 2016 National Association of Insurance Commissioners 1

Draft: 12/7/16

Antifraud (D) Task Force Conference Call

September 27, 2016 The Antifraud (D) Task Force met via conference call Sept. 27, 2016. The following Task Force members participated: Wayne Goodwin, Chair, represented by Shane Guyant (NC); John D. Doak, Vice Chair, represented by Rick Wagnon (OK); Lori K. Wing-Heir represented by Alex Romero (AK); Allen W. Kerr represented by Melissa Grisham (AR); Dave Jones represented by George Mueller (CA); Karen Weldin Stewart represented by Franklin T. Pyle (DE); Ralph T. Hudgens represented by Sherry Mowell (GA); Dean L. Cameron represented by Lori Braseth (ID); James J. Donelon represented by Matthew Stewart (LA); Mike Rothman represented by Michael Marvin (MN); John M. Huff represented by Carrie Couch (MO); Adam Hamm represented Dale Pittman (ND); Bruce R. Ramge represented by Martin Swanson (NE); Roger A. Sevigny represented by Brendan Harris (NH); Mary Taylor represented by Michelle Brugh Rafeld (OH); David Mattax represented by Mark Einfalt (TX); Todd E. Kiser represented by Armand A. Glick (UT); Jacqueline K. Cunningham represented by Mike Beavers (VA); and Mike Kreidler represented by Mark Couey (WA). 1. Adopted its 2017 Proposed Charges Mr. Guyant said the Task Force’s 2017 proposed charges were exposed for comment following the Summer National Meeting. Mr. Guyant said the charges have three suggested changes aside from technical and formatting edits completed by the NAIC. Mr. Guyant said the first change is to the first charge, which reads “The Antifraud (D) Task Force will: Work with the Title Insurance (C) Task Force to review issues and concerns related to fraud activities and schemes related to title insurance fraud.” Mr. Guyant said a suggestion was submitted by Ms. Rafeld to broaden the charge in order to cover all committees, task forces and working groups within the NAIC committee structure that may encounter fraudulent issues. Mr. Guyant said the new language would read as follows: “The Antifraud (D) Task Force will: Work with NAIC committees, task forces and working groups (e.g., Title Insurance (C) Task Force, Public Adjuster (C/D) Working Group, etc.) to review issues and concerns related to fraud activities and schemes related to insurance fraud to review issues and concerns related to fraud activities and schemes related to title insurance fraud.” Mr. Guyant said the next two changes would be to the working groups listed under the Task Force. Mr. Guyant said the suggestion is to change the name of the Antifraud Training and Seminar (D) Working Group to the Antifraud Education Enhancement (D) Working Group and change the name of the Information Technology (D) Working Group to the Antifraud Technology (D) Working Group. Mr. Guyant said the purpose behind these changes is to provide more clarification that these Working Groups are under the Antifraud (D) Task Force. Ms. Rafeld made a motion, seconded by Mr. Beavers to adopt the Task Force’s 2017 proposed charges (Attachment One-A). The motion passed unanimously. Having no further business, the Antifraud (D) Task Force adjourned. W:\National Meetings\2016\Fall\TF\Antifraud\9.27.16 Antifraudmin.docx

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2016 NAIC ANTI-FRAUD TASK FORCE MEETING

“A Portrait of Fraud- Are Insurers Properly Recognizing the Graying of America”

Presented By: Matthew J. Smith, Esq.

Attachment One

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Fall 2014 Volume 4 * Number 3

Matthew J. Smith, Esq.

Smith, Rolfes & Skavdahl, Co., LPA

Fall 2014 Volume 4 * Number 3

Graying Baby Boomers May Swell Ranks of Fraudsters

Journal of

Insurance Fraud

in America

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19500 Victor Parkway, Suite 500

Livonia, Michigan 48152

(734) 402-8301

ww

w.sm

ithrolfes.comsrslaw

@sm

ithrolfes.com

41 South High Street

Suite 2300 Colum

bus, Ohio

43215(614) 469-7130

600 Vine StreetSuite 2600Cincinnati, O

hio 45202(513) 579-0080

1605 Main Street, Suite 1106

Sarasota, Florida 34236(941) 684-0100

10200 Forest Green Blvd, Suite 602Louisville, Kentucky 40223

(502) 371-4000

200 S. Orange Avenue, Suite 1575

Orlando, Florida 32801

(407) 284-4990

350 E. Las Olas Boulevard, Suite 1250

Fort Lauderdale, Florida 33301(954) 530-5601

300 Buttermilk Pike, Suite 324

Ft. Mitchell, Kentucky 41017

(859) 547-1200

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© 2016 National Association of Insurance Commissioners 1

Draft: 12/8/16

Antifraud Training and Seminar (D) Working Group Conference Call

November 8, 2016 The Antifraud Training and Seminar (D) Working Group of the Antifraud (D) Task Force met via conference call Nov. 8, 2016. The following Working Group members participated: Michelle Brugh Rafeld, Chair (OH); Alex Romero (AK); Shane Guyant (NC); and Armand A. Glick (UT).

1. Discussed the 2016 and 2017 Education and Training Ms. Rafeld said the Working Group has set up a presentation to take place during the Antifraud (D) Task Force open meeting at the Fall National Meeting. Ms. Rafeld said the purpose of the presentation is intended to shed light on the fact that the baby-boom generation could have a rise in committing fraud in areas including retirement funds and real estate. Ms. Rafeld said the Antifraud (D) Task Force meeting will be extended an additional 30 minutes to provide time for the presentation, any questions and the other meeting matters on the agenda. Ms. Rafeld said moving forward for the remainder of this year and into 2017, the Working Group members will be supplying additional potential topics for education—whether it is a webinar, informative email distribution webinar or online classroom. Ms. Rafeld said the Working Group will begin collecting a list of potential topics to pull from to provide training or educational type of information. Ms. Rafeld said the Working Group will use the Antifraud (D) Task Force web page to post the educational items. Ms. Rafeld said there is currently an NAIC “Basic Fraud Course,” which is a two-week self-study course designed to assist state insurance officials in detecting, monitoring and investigating insurance fraud, both by and against consumers. Participants will learn basic terms and concepts, how to use available fraud databases provided by the NAIC and other online search tools in their investigations, and how to investigate agent and consumer fraud. Health care and workers’ compensation will be major areas of focus. Legal considerations also will be highlighted. Ms. Rafeld said the Basic Fraud Course will be reviewed and updated for 2017. Ms. Rafeld said the goal of the Working Group will be to create additional educational courses on different areas of fraud that can be offered through the NAIC Education Department after the Basic Fraud Course has been completed. Mr. Guyant said the Working Group should look into the possibility that the NAIC Education Department is looking into a specific fraud designation that could be acquired through the NAIC. Ms. Rafeld said another area of training that has been presented to the Working Group is the development of guidelines or best practices that could assist state fraud departments with every day functions. Ms. Rafeld said as a reference, she and Greg Welker (NAIC) will review the NAIC State Licensing Handbook for ideas on the development of best practices or guidelines that an individuals could rely on to use if they are new to the fraud department. Ms. Rafeld said the intent of the guidelines is that eventually the guidelines will have information that can be referenced by new and seasoned fraud-fighting individuals. Ms. Rafeld said the Working Group would report on this topic at the Task Force meeting during the Fall National Meeting. Having no further business, the Antifraud Training and Seminar (D) Working Group adjourned. W:\National Meetings\2016\Fall\TF\Antifraud\Antifraud Training and Seminar WG\11.8.16 ATSWG Conf.Call Minutes.docx

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Inform

ation Sharing and Technology (D) W

orking Group

USER

(Uniform

System Enhancem

ent Request) Form

s Status Report

As of D

ecember 7, 2016

© 2014 N

ational Association of Insurance C

omm

issioners 1

O

utstanding Requests

U

SER #

Requestor

Request Sum

mary

Phase N

AIC

R

ecomm

endation Target End

Date

Status

111 A

rmand G

lick (U

T) D

evelop attachment capabilities for

online fraud reporting D

etailed A

nalysis

N

AIC

staff is reviewing request. A

dditional detail is being determ

ined by the AFTF.

112 H

arsh Mody

Develop a O

FRS

Store R

eport field A

submission into O

FRS

would

produce a identifier that submitters

can use as a respective case id

Detailed

Analysis

Nuetral

TBD

Sm

all technical change for NA

IC w

hich would m

ake the input optional for users.

US

ER

Form

Cycle

Prelim

inary A

nalysis (N

AIC

Staff)

1st

Consideration

(Task Force)

Detailed

Analysis

(NA

IC S

taff)

2nd

Consideration

(Task Force) D

evelopment

(NA

IC S

taff) Testing

(NA

IC S

taff)

Withdraw

n/P

ending/ C

omplete

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