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

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 outlook on insurance claims than the rest of the nation, according to a recent study released by the Insurance Research Council of Malvern, Pa.

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

IRC said its special state-specific analysis was prompted by recent indicators suggesting that auto insurance fraud is on the rise in New York State, particularly in the New York City metropolitan area.

According to polling and interviews done for IRC, New York Staters were more likely than respondents nationwide to say its acceptable to increase an insurance claim by a small amount to make up for premiums paid when no claims were made.

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

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

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

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

One quarter of New Yorkers polled said it was acceptable to deliberately underestimate the number of miles driven on an insurance application, compared to fewer than one in five respondents countrywide (18 percent).

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

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

IRC said, however, that although New Yorkers appeared to have a higher tolerance for some forms of insurance fraud, their level of concern for the issue of insurance fraud across the state was comparable to that of most respondents.

Three-quarters of respondents in New York State expressed concern about insurance fraud in their state, compared to 78 percent of national respondents. There was only a slight difference between New Yorkers and respondents countrywide in terms of their likelihood to report someone for committing insurance fraud (3 percent 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," and the "more permissive attitudes of New Yorkers toward insurance fraud suggest that statewide education is needed on the economic and societal costs of these crimes and the benefits to consumers of anti-fraud efforts."

Bernard N. Bordeau, president of the New York Insurance Association based in Albany, N.Y. said the results did not surprise him because there is a major problem in the state with medical fraud on auto accident claims. "We've known about it for five years and the Assembly Democrats refuse to acknowledge it or do anything to fix it," he said.

Mr. Bordeau pointed to the fact that the Democrat-controlled Assembly had not passed a measure favored in the Republican-controlled State Senate that would make some insurance fraud crimes a felony.

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

In the past, Democrats have said they are unwilling to move on individual portions of a fraud plan unless Republicans are willing to approve a broad insurance package that includes consumer protections.

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

The first study, which explored public acceptance of insurance fraud and unethical behavior in other areas, as well as underlying attitudes about fraud countrywide and specifically in New York State, was conducted by RoperASW in October 2002.

The study consisted of telephone interviews conducted among a national sample of 1,008 American male and female respondents eighteen years of age or older, as well as a supplemental sample of 501 adult respondents residing in New York State.

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

More information on the study's methodology and findings is available from IRC at (610) 644-2212, ext. 7569; fax number (610) 640-5388; or at irc@cpcuiia.org. IRC's Web site is www.ircweb.org. Copies of the study are $35 in the U.S. ($50 elsewhere) postpaid from the IRC, 718 Providence Road, Malvern, Pa. 19355-0725.