CHAPTER 276

FORMERLY

SENATE BILL NO. 256

AN ACT TO AMEND TITLE 18 OF THE DELAWARE CODE TO CREATE A FRAUD BUSTERS PROGRAM TO DISCOURAGE INSURANCE FRAUD IN THE STATE OF DELAWARE.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE :

WHEREAS, the existence of insurance fraud inflates insurance rates for law-abiding Delaware policyholders: and

WHEREAS, the Delaware Department of Insurance relies upon reports from the public and from insurance companies in uncovering incidents of insurance fraud; and

WHEREAS, the Delaware Crime Stoppers program has had a great deal of success in encouraging the public to report crimes by offering rewards to those persons whose tips lead to successful prosecutions; and

WHEREAS, the State wishes to encourage Delawareans to also report incidents of insurance fraud, and seeks to do so by offering rewards to persons whose reports result in the successful prosecution of insurance fraud cases by the Insurance Department; and

WHEREAS, it is also important to create safeguards to ensure that individuals do not make frivolous or bad-faith reports of fraud against others,

NOW THEREFORE:

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:

Section 1. Amend Section 2411(f) of Title 18 of the Delaware Code by adding the following at the end thereof:

“However, the Department may, in its discretion, pay a reward drawn from the assessed administrative penalty to an individual who reports to the Insurance Department an incident of insurance fraud which results in either an admission or finding of fraud. The reward shall not exceed the lesser of the assessed administrative penalty or $25,000. In order to be eligible to receive a reward pursuant to this subsection, a reporting individual must sign a written complaint that subjects the person to the sanctions of 11 Del.C. § 1233. An insurance carrier that is the victim of insurance fraud is not eligible to receive a reward pursuant to this subsection for reporting such fraud.”

Approved June 7, 2006