Anti-Fraud Effort Cuts N.Y. Auto Claim Cost

Average auto injury claim costs in New York fell again in 2004 for the third year in a row, the New York Alliance Against Insurance Fraud (NYAAIF) reported today, citing anti-fraud action as the reason.

NYAAIF said an analysis by the Insurance Information Institute (I.I.I.) has found that:

oThe cost of no-fault personal auto accident injury (PIP) claims is down 32 percent since 2000. Last year, NYAAIF said the decrease since 2000 was 20 percent.

oThe frequency of claims, NYAAIF said, is now down 21 percent, but still above the national average.

oThe average cost of PIP claims in New York ($5,867) is now below the national average ($7,060). For 2003, the group reported an average claim cost of $6,788 compared with $8,571 in 2002.

oNYAAIF no-fault-related fraud reports to the New York Department of Insurance, while still high, fell 17 percent in 2004.

The I.I.I. analysis pointed out that in 2000, no-fault claim costs in New York were growing faster than any other no-fault state, rising at 28.5 percent per year, with losses rising at more than twice (121 percent) the national average.

Bernard Bourdeau, president of NYAAIF, said the state's "remarkable turnaround" in claim costs "is the result of aggressive efforts to combat fraud by insurance companies, the National Insurance Crime Bureau the insurance frauds bureau, the state attorney general's office and local prosecutors and law enforcement."

He said that of particular importance has been the ability of insurers to spend more time investigating suspicious claims as the result of the implementation of the insurance department's Regulation 68.

Regulation 68 requires persons injured in auto accidents to notify their insurance company within 30 days of an accident rather than 90 days, which was previously permitted, as well as requiring them to submit proof of medical costs, wage loss and other expenses within 45 rather than 180 days. Before the revision, insurers had only a limited time for investigation before they faced the possibility of facing penalties for delaying a claims payment.

Mr. Bourdeau also cited as a factor a greater public awareness of the costs and consequences of insurance fraud as a result of a statewide public information campaign undertaken by NYAAIF.

"New Yorkers have begun to reap the rewards as the costs of auto insurance in the state are beginning to decline," he said.

However, Mr. Bourdeau said, much more remains to be done to bring auto insurance fraud under control including:

oDecertifying fraudulent health providers.

oIncreasing penalties for "runners," people who solicit claimants to participate, often unwittingly, in no-fault fraud scams.

oExtending the amount of time insurers can investigate suspicious claims.

"We've made remarkable progress in combating fraud in New York, but the battle is far from over," he said. "Insurance criminals will continue to exploit every loophole in the system unless we act to close them. The collective effort of the insurance industry, the insurance department, law enforcement and the public must stay the course."

NYAAIF, based in Albany, N.Y., is a cooperative effort by insurance companies in New York to educate the state's insurance consumers about insurance fraud.