Another Package In NY Anti-Fraud Saga

Although the Democrat-controlled Assembly has also put forward anti-fraud proposals, such legislation has been stuck in a stalemate mired by Assembly disagreements with the Senate and Republican Gov. George Pataki.

Complicating matters is that this is an election year, with Gov. Pataki campaigning for a second term. Republicans have a concern that Democrats might do nothing out of political considerations, according to Duncan Davie, chief of staff for Sen. James L. Seward, R- Oneonta, the Senate Insurance Committee chairman.

Democrats might hope inaction will allow auto insurance rates to continue rising, and that Mr. Pataki will get the blame, Mr. Davie suggested. "This is too serious an issue to make it political," he complained.

Christine Olli, Assembly Insurance Committee associate director, said the panel's chairman–Assemblyman Alexander "Pete" Grannis, D-Manhattan–thought the Senate proposal announced yesterday was "a positive step."

She said the Assembly had been working on the fraud issue "since the early ?90s," and had passed a comprehensive package last year. The Democrats, citing an expected cost saving from a reduction in phony claims, are including a freeze on auto rates in their legislation–a major sticking point in talks between the two parties.

Mark Hansen, a spokesman for Senate Majority Leader Joseph L. Bruno, R-Saratoga, said the cap on rates was "troubling?It's not something the Senate agrees with."

The Senate package would mandate that the insurance superintendent require carriers to pass along any savings from fraud abatement in setting premium rates. Mr. Hansen said the measure should pass in the next couple of weeks, and "we would hope we can negotiate a compromise."

He said the legislature historically tends to take its time on such large measures, and to resolve them "in the third week of June."

Michael Moran, director of public affairs for the Washington-based American Insurance Association Northeast region, said he thought some measure might pass because his group is lobbying hard, and legislators are starting to hear from constituents about an insurance availability problem.

The governor, Assembly and Senate all say that auto fraud will top their agenda after passage of a budget, perhaps next month, Mr. Moran noted.

John Cucci, Northeast regional vice president for the Alliance of American Insurers, based in Downers Grove, Ill., said the situation is "a standoff." Gov. Pataki, he noted, is pushing for a major reform measure, including use of managed care, directing policyholders to preferred collision shops, tougher definition of serious injury, and no non-economic cause-of-action for uninsured drivers.

Mr. Cucci said the Alliance would support the Senate package, but noted that everything in the latest Senate proposal is "in other bills that haven't moved."

Mr. Cucci said that in the meantime the Senate Insurance Committee has voted out a "flex rates" bill, permitting auto insurers to increase premiums up to 7 percent without prior regulatory approval, and to non-renew up to 2 percent of their policies annually. At the same time, the Assembly Insurance Committee has voted out a measure allowing 2 percent non-renewals, but with flex-rating that permits only reductions in rates.