Antifraud Task Force OKs Classifications for Attorneys.

NASHVILLE, Tenn, -- The Federal/State Coordinating Working Group of the Antifraud Task Force approved a resolution to give insurance commissioners authority to designate attorneys as state, or insurance, fraud prosecutors. It would also allow commissioners to negotiate with the state attorney general or state district attorney to allocate resources for insurance fraud prosecution.

The resolution modifies a 2-year-old insurance fraud-prevention model act.

Though the National Association of Insurance Commissioners has engaged in anti-fraud work for years, working group Chairman Mike Bownes said the $200 million in fraud allegedly masterminded by Martin Frankel exposed the consequences of a lack of communication between federal securities regulators and state insurance regulators. Former bond trader Frankel fled the United States in April 1999 as investigators closed in, but he was captured in Germany and recently returned for prosecution.

"He had problems before in securities," said Bownes, who works in the Alabama insurance department. "Especially now with financial services integrated, there has to be better communication between all different financial services."

Since the Frankel case, the NAIC has focused on providing more fraud training for insurance examiners.