The Insurance Fraud Prevention Act Law and Legal Definition

The Insurance Frauds Prevention Act is a federal legislation propounded to prevent and penalize insurance fraud. Accordingly, misappropriation of insurance funds, filing fraudulent financial statements and the like are considered federal crimes.

The Act facilitates conducting of undercover activities, civilian operations so as to investigate insurance fraud.

Many states in the U.S. have adopted the Act. The following is an example of a state statute (New Jersey) that explains the purpose of the act.

N.J. Stat. § 17:33A-2 The purpose of this act is to confront aggressively the problem of insurance fraud in New Jersey by facilitating the detection of insurance fraud, eliminating the occurrence of such fraud through the development of fraud prevention programs, requiring the restitution of fraudulently obtained insurance benefits, and reducing the amount of premium dollars used to pay fraudulent claims.