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Letter to the Editor

Senator Schumer Introduces Automobile Insurance Fraud Bill

U.S. Sen. Charles Schumer, D-N.Y., has introduced Senate Bill 2850, The Cheaper Car Insurance Act. The legislation will make auto insurance fraud a federal crime punishable by a maximum of 15 years in prison and over $100,000 in fines.

This bill would be the first federal legislation to call for criminal and civil penalties for auto insurance fraud. Schumer cited increasing auto insurance fraud as a primary reason for increased automobile insurance rates.

Schumer said, "It is time for us to strike back and make auto insurance fraud a federal crime and really crack down on those who commit auto insurance fraud."

The bill has several components, including:

• Imposing federal criminal penalties and fines for fraud up to $100,000. If the cost of the fraud exceeds $100,000, the fines may cover the fraud's total cost.
• Directing the Department of Justice (DOJ) to create best practices states could use to license auto body repair facilities that perform work paid for by insurance companies and license medical treatment provided for people involved in auto accidents.
• Creating and funding special units in the U.S. attorneys general offices in the 10 cities most severely affected by auto insurance fraud. These units will be staffed with personnel who do nothing but work on auto insurance fraud.
• Requiring the DOJ to work with the attorneys general offices to aggressively investigate fraudulent chop shops and salvage yards, prosecute auto insurance fraud and report statistics on investigations, prosecutions and convictions to the U.S. Senate Courts and Administrative Oversight Committee, a subcommittee of the Senate Judiciary Committee.

"This bill sends a very simple, very strong and very clear message to anyone even thinking of committing auto insurance fraud: Expect to be arrested, expect to be tried in federal court by federal prosecutors, and don't make any plans for the next five to 15 years," said Schumer.

"The Automotive Service Association (ASA) is reviewing the legislation and looks forward to working with the Senate Judiciary Committee on the legislation," said Bob Redding, ASA's Washington, D.C., representative. "It is a very different approach to reducing insurance premiums as offered in the Congress during the last few years. Most of the recent focus in the past has been on capping or controlling the amounts of damages to be awarded for injuries and deaths."

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