Insurers Report ‘Encouraging’ Progress in Crackdown on Auto Claim Fraud in N.Y.

September 16, 2004

The fight against insurance fraud in New York is producing encouraging results as the cost of the average auto injury claim under the state’s no-fault insurance system declined by 20 percent between 2002 and 2003, according to the New York Alliance Against Insurance Fraud (NYAAIF).

NYAAIF noted that while New York remains the insurance fraud capital of the country, the vigorous crackdown on insurance fraud and abuse by insurance companies, law enforcement agencies and prosecutors, the state insurance fraud bureau and a statewide public information program has helped reduce the size of the average PIP claim.

For example, the Insurance Information Institute (I.I.I.) reported that:

• The average injury claim cost (known as PIP claims) in 2003 is $6,788, down from $8,571 in 2002, according to the I.I.I.

• While New York’s PIP costs were one percent above the national average in 2003, they peaked 26 percent above the countrywide average in the first quarter of 2002.

However, the I.I.I. analysis also reported that

• The number of PIP claims rose 2.4 percent in 2003, compared with a decline of 0.8 percent nationally.

• The frequency of PIP claims in New York is 18 percent above the national average.

“It’s possible that the success of fraud-fighting efforts have caused insurance criminals to try and fly under the radar of investigators by filing smaller bogus claims, but more of them,” said Bernard Bourdeau of NYAAIF.

Bourdeau cited several reasons for the positive trends, including greater recognition on the part of law enforcement, prosecutors and the public of the costs of fraud.

He also reported that insurers are now able to utilize an anti-fraud measure issued by the state insurance department. The measure, known as Regulation 68, requires people injured in auto accidents to notify their insurance company within 30 days of an accident, rather than 90 days, and submit proof of medical, wage loss and other expenses within 45 days, rather than 180 days.

“The prolonged notification periods allowed corrupt medical professionals to generate masses of bogus treatment bills before the insurance company had a chance to thoroughly investigate them,” said Bourdeau.

He pointed out that Governor Pataki and the insurance department have proposed a package of anti-fraud measures to close other legal loopholes that make it difficult for insurers to combat fraud, but the legislature has not acted on them. These include criminal penalties for “runners” who solicit participants in fraud scams, medical protocols, and decertification of corrupt medical providers.

“Tough anti-fraud measures are required to build on the progress made to date and secure future gains,” said Bourdeau.

He also observed that the public now has a greater awareness of costs of fraud both through higher insurance premiums and as potential victims of staged accidents.

Bourdeau said that millions of New Yorkers have seen television commercials or heard radio ads produced by NYAAIF which demonstrate the impact of insurance fraud on New Yorkers.

The New York Alliance Against Insurance Fraud is a cooperative effort by insurance companies in New York to educate the state’s insurance consumers about the costs of insurance fraud, the many forms it can take and what they can do to help fight back.

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