NU Online News Service, April 26, 3:34 p.m.EDT

Insurance groups again made their case during a New Yorklegislative hearing for reforms to the state's no-fault system,which the groups say is riddled with fraud and costs citizenshundreds of millions of dollars a year.

The hearing, being held today by the New York State SenateInsurance Committee, is similar to a hearing the committee held in February 2010. Additionally, the stateAssembly held a roundtable discussion on no-fault reforms daysbefore the Senate held its 2010 hearing.

A statement released by the Insurance Information Institute(I.I.I.) in advance of today's hearing states: "Due to the absencein New York of safeguards, such as medical-treatment guidelines orutilization reviews and controls, the cost of the average no-faultpersonal injury protection (PIP) claim soared 48 percent between2004 and 2010, a time frame during which medical costs in the U.S.rose by 25 percent." The I.I.I. says the average cost of a no-faultauto-insurance claim in New York State was $8,664 in 2010.

"The scale of fraud and abuse in New York State's no-faultauto-insurance system today remains at crisis levels," I.I.I.President Robert Hartwig says in his scheduled testimony. "Not onlyare New York's courtrooms filled with no-fault cases, but anInsurance Research Council (IRC) study found that over one in fiveof all downstate New York no-fault closed claims showed signs offraud, and more than one in three appeared to be inflated."

Ellen Melchionni, president of the New York InsuranceAssociation (NYIA), says her association supports legislation(S2816A/A6286) introduced by Sen. James Seward (R-Chanango) andAssemblyman Joseph Morelle (D-Irondequoit) that "contains numerousremedies, including giving insurance carriers adequate time toinvestigate fraud, encouraging efficient and fair settlement ofdisputes and creating tougher penalties for fraud."

She says NYIA also supports additional bills meant to addressstaged auto accidents. One, she says, would allow insurers tocancel new policies purchased with phony checks or creditcards.

"If there is not comprehensive reform, we are concerned that thepresent crisis will become progressively worse, leading to a systemthat is not only broken but beyond repair," Melchionni says.

Kristina Baldwin, assistant vice president for the PropertyCasualty Insurers Association of America, says: "It is clear thatsomething must be done to put a stop to no-fault fraud for thebenefit of the hard-working men and women of this state who arestruggling to pay their high auto-insurance bills. Althoughinsurers will continue to employ great efforts to fight fraud,changes in the law are necessary to stem this growing problem."