New York Insurance Superintendent Howard Mills is campaigning totoughen up the state's light insurance fraud penalties, sending aflurry of letters to legislators urging them to break theirgridlock and tackle the problem.

Speaking at Orange County Chamber of Commerce in Newburgh, N.Y.,yesterday, Mr. Mills railed against puny fraud penalties in thestate. "The problem is that we really need to toughen the penaltiesfor insurance fraud in New York State. The penalties for fraud oninsurance are a joke," Mr. Mills said, a spokesman for the New YorkInsurance Department reported.

Spokesman Michael Barry said also that on June 15, Mr. Millssent a letter to New York State legislators on this topic. In theletter, Mr. Mills said that as the scheduled end to the legislativesession rapidly approaches, "I urge both houses to reach acompromise on several auto insurance fraud measures that will gettough on those who seek to exploit New York's no-fault law andfurther reduce automobile insurance rates for all New Yorkers."

Over the past several years attempts to toughen fraud penaltiesthat have been proposed by the Republican-controlled Senate havegenerally been blocked by the Democratic-controlledLegislature.

Democrats have said they will pass fraud measures only if theyare linked to a comprehensive package of insurance law revisionsthat includes controls on rates.

Current Senate-Assembly tussles over insurance issues alsoinclude a conflict over giving permanency to the state's FAIR plan,the insurance market of last resort for homes and businesses knownas the New York Property Insurance Underwriting Association. NYPIUAis due to expire in eight days.

Mr. Mills has kept out of that conflict. He said in his letterthat the legislature needs to give prosecutors necessary tools toattack fraud, including increasing penalties on those whoorchestrate staged accidents as well as on "runners"–those whocommit insurance fraud by linking accident victims to attorneys ordoctors for fraudulent purposes.