IRC: N.Y. State, Big Apple Rotten On Insurance Fraud

By Daniel Hays

NU Online News Service, Aug. 1, 3:54 p.m.EDT?New York State residents have a more crooked outlookon insurance claims than the rest of the nation, according to arecent study released by the Insurance Research Council of Malvern,Pa.

In reaction, the leader of a New York insurance trade group saidthe state's attitudes were fostered by cynical politicians.

IRC said its special state-specific analysis was prompted byrecent indicators suggesting that auto insurance fraud is on therise in New York State, particularly in the New York Citymetropolitan area.

According to polling and interviews done for IRC, New YorkStaters were more likely than respondents nationwide to say itsacceptable to increase an insurance claim by a small amount to makeup for premiums paid when no claims were made.

Twenty-five percent of New Yorkers versus 20 percent among therest of the nation agreed with the notion of making up for pastpremiums, IRC said.

Researchers also found New Yorkers were slightly more likely tosay it is acceptable to increase a claim for the deductible thatwould have otherwise been paid--32 percent versus 29 percent.

The study, which was supplemented by a random sample of 501adults in New York State, examined public attitudes towardinsurance fraud to assess whether attitudes differed among NewYorkers compared to respondents across the country.

IRC said the survey team found people in New York State weremore likely than respondents countrywide to tolerate fraud in areasother than insurance, such as exaggerating one's experience,education, or income on a job application. They were also morelikely to find specific examples of application fraud and claimfraud as acceptable.

One quarter of New Yorkers polled said it was acceptable todeliberately underestimate the number of miles driven on aninsurance application, compared to fewer than one in fiverespondents countrywide (18 percent).

The research also revealed that New Yorkers were more than twiceas likely as respondents across the country to say it wasacceptable to stay out of work longer than medically necessary toget a higher insurance settlement (11 percent in New York versus 5percent nationally).

New Yorkers were also found more likely than nationalrespondents to agree that it is acceptable to change the details ofan accident on a claim to ensure payment (14 percent versus 9percent).

IRC said, however, that although New Yorkers appeared to have ahigher tolerance for some forms of insurance fraud, their level ofconcern for the issue of insurance fraud across the state wascomparable to that of most respondents.

Three-quarters of respondents in New York State expressedconcern about insurance fraud in their state, compared to 78percent of national respondents. There was only a slight differencebetween New Yorkers and respondents countrywide in terms of theirlikelihood to report someone for committing insurance fraud (3percent in New York State versus 4 percent countrywide).

Elizabeth A. Sprinkel, senior vice president, who heads the IRC,said insurance fraud continues to be a concern in New York," andthe "more permissive attitudes of New Yorkers toward insurancefraud suggest that statewide education is needed on the economicand societal costs of these crimes and the benefits to consumers ofanti-fraud efforts."

Bernard N. Bordeau, president of the New York InsuranceAssociation based in Albany, N.Y. said the results did not surprisehim because there is a major problem in the state with medicalfraud on auto accident claims. "We've known about it for five yearsand the Assembly Democrats refuse to acknowledge it or do anythingto fix it," he said.

Mr. Bordeau pointed to the fact that the Democrat-controlledAssembly had not passed a measure favored in theRepublican-controlled State Senate that would make some insurancefraud crimes a felony.

If legislative leaders are not serious enough about fraud "toput the crooks in jail?. why should the rest of the people in thestate be serious?" Mr. Bordeau asked.

In the past, Democrats have said they are unwilling to move onindividual portions of a fraud plan unless Republicans are willingto approve a broad insurance package that includes consumerprotections.

The report titled "Insurance Fraud: A Public View," was based ondata gathered in two separate studies, IRC said.

The first study, which explored public acceptance of insurancefraud and unethical behavior in other areas, as well as underlyingattitudes about fraud countrywide and specifically in New YorkState, was conducted by RoperASW in October 2002.

The study consisted of telephone interviews conducted among anational sample of 1,008 American male and female respondentseighteen years of age or older, as well as a supplemental sample of501 adult respondents residing in New York State.

The second study, conducted by RoperASW in June 2002, consistedof in-person interviews conducted among a national sample of 1,995American male and female respondents eighteen years of age orolder. It explored specific actions by individuals, insurers, andthe government to deter fraud.

More information on the study's methodology and findings isavailable from IRC at (610) 644-2212, ext. 7569; fax number (610)640-5388; or at [email protected]. IRC's Web siteis www.ircweb.org.Copies of the study are $35 in the U.S. ($50 elsewhere) postpaidfrom the IRC, 718 Providence Road, Malvern, Pa. 19355-0725.