WHAT a difference a few years makes. Insurance Commissioner John Doak has gone from saying his agency shouldn't be responsible for doing most fraud investigations to declaring the agency needs police-level firepower to handle fraud investigations. Both claims are half-baked; each suggests a lack of seriousness about the job of insurance commissioner.
Shortly after taking office in 2011, Doak announced plans to lay off six of nine investigators in his anti-fraud unit. Deputy Insurance Commissioner Randy Brogdon said insurance companies needed to handle most investigations in-house since the majority of cases involved individuals defrauding companies. The only cases the agency would handle, he said, were those where companies allegedly defrauded individuals.
However, at that time the anti-fraud unit was funded by $750 annual assessments on insurance companies. The companies were, in fact, already paying for the investigations. Having state officials conduct them instead of the affected company reduced conflict-of-interest concerns.
That Brogdon made the recommendation to cut staff was notable. He was one of three former state legislators Doak hired who had little or no insurance industry experience. The layoffs were expected to save about $323,000 a year, which many suspected was necessary because Brogdon and the other two lawmakers were being paid nearly $100,000 apiece.
Jump ahead to 2012, and Doak has spent more than $180,000 on everything from high-tech shotguns to seven police-package vehicles for the now seven-member anti-fraud unit. It seems two fraud investigators were shot and killed in Louisiana last year, so Doak argues a mini-police force is now a must.
In 2011, people committing insurance fraud were a minor nuisance who could easily be handled by an insurance company's internal investigators. Now Doak says they're desperate, dangerous people who require a near-military response from the state.
How to Profit From Fracking and Shale. Access Our Free Report Here.