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Insurance chief focusing on fraud

Ralph Hudgens, Georgia insurance commissioner, says insurance fraud is not a “victimless crime.” Since the 
creation of his fraud team, the prosecution of fraud by the commissioner’s office has more than doubled.

Ralph Hudgens, Georgia insurance commissioner, says insurance fraud is not a “victimless crime.” Since the creation of his fraud team, the prosecution of fraud by the commissioner’s office has more than doubled.

DAWSON -- The number of insurance fraud cases being prosecuted in Georgia has doubled in the first six months since the creation of his "fraud team," Georgia Insurance and Safety Fire Commissioner Ralph Hudgens said Wednesday.

Speaking to the Dawson Rotary Club, Hudgens, who became the state's insurance commissioner in January 2011, said that local-level prosecutors previously had approached insurance fraud cases as victimless crimes, often not giving them enough time to develop.

He said one of his main initiatives since becoming commissioner has been to "fight against fraud."

"We have hired seven new fraud investigators and two new attorneys just for that purpose," Hudgens said. "We have an ex-district attorney just to tie the cases together with a bow for the local DAs."

Hudgens cited examples of insurance fraud perpetrated by some in the roofing industry who advertise that they will pay insurance deductibles on roofing jobs. The General Assembly ruled against that practice, Hudgens said, but some roofers continued to advertise the option and a few of them have defrauded both consumers and insurance companies.

Hudgens mentioned a "sting" operation that caught one particular roofer. It was organized by state insurance office investigators and "filmed from the trees" by an Atlanta media outlet. According to Hudgens, workers with the roofing company were asked to go atop a perfect roof to assess any damage and to recommend whether it should be replaced. A worker was caught in the act of damaging the roof so it would have to be replaced, defrauding an insurance company. The man was arrested on spot and was later convicted, Hudgens said.

In another case, Hudgens said, a multi-lines insurance agent in Fitzgerald had been selling insurance but instead of binding the coverage, he was depositing the premiums into his own account. The agent was arrested and charged with 100 counts of insurance fraud, with a $600,000 bond set.

Hudgens said that what was "so surprising" to him was that three other agents in or near the town knew what was going on but never notified authorities.

"They all told me how glad they were we'd gotten him and that they known about it for years," Hudgens said. "They said they didn't think anything would be done about it."

Hudgens told the group it was the responsibility of the state insurance office to protect Georgia consumers in all insurance issues and that dealing with fraud against insurance companies was one of the biggest ways to do that.

"When insurance companies are being ripped off by fraud, it means you're paying more in premiums," Hudgens said.

Hudgens said he believes the best way to regulate the insurance industry is to make the companies play by the rules, then "stay out of the way."

"Government should blow a whistle when a player is out of bounds and throw a flag for a penalty. Other than that we should just let the game go on," Hudgens said.

He said he learned in government -- Hudgens has been both a state representative and a state senator -- that there are two tendencies of a bureaucracy, and it was his mission to change them as commissioner.

"The first is to put every possible regulation you can on the books because that creates job security, and the second is to never ever ever make a decision. If you don't make a decision no one can criticize you for making a bad one."