Auto insurance premiums for drivers in New York's assigned risk pool, the Automobile Insurance Plan, will be reduced by 7 percent, the New York State Insurance Department announced today.
Insurance Superintendent Eric R. Dinallo said the rate reductions can be attributed to the department's continuing efforts to combat fraud.
"This rate reduction will result in statewide savings of nearly $20 million for new drivers and others in the assigned risk plan," he said.
The new rate schedule will go into effect Aug. 15 for new policies, while the new rate for renewed policies is for Oct. 1, said Mr. Dinallo.
The department said it has engaged in numerous strategies for fraud reduction including working more closely with local prosecutors on data collection.
In addition, "investigators are in the offices of local DA's [district attorneys], which gives added resources," said department spokesperson Ron Klug.
The frauds bureau also has a department that works specifically on insurance fraud, as well as with local law enforcement agencies such as the New York City Police Department.
Bureau investigations and litigation in 2006 led to more than 600 insurance fraud arrests and the payment of more than $8.5 million in fines and restitution, according to the 2006 annual report of the superintendent of insurance to the New York State Legislature.
But the total cost for insurance industry losses from fraud is unknown.
"It's impossible to know because not all cases of fraud are discovered," said Mr. Klug.
"There are industry reports that say 20 percent of claims are fraudulent, but these are just industry numbers," he added.
The Insurance Department said the Auto Insurance Plan is the insurer of last resort for individuals unable to obtain insurance, and premiums charged by the AIP are determined according to a unified set of department approved rates.
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