NU Online News Service, April 21, 3:13 p.m. EDT
EAST ELMHURST, N.Y.–No-fault auto accident insurance fraud in New York State last year amounted to a $229 million ripoff of insurers and policyholders, said Steve Weisbart, Insurance Information Institute vice president and chief economist.
The 2009 figure was a 17.3 percent increase over the previous year, part of a sharp increase in no-fault auto accident fraud activity the state has seen since the end of 2004, he told an anti-fraud gathering here today.
Speaking at the New York Insurance Association (NYIA), National Insurance Crime Bureau (NICB) New York Insurance Fraud Summit, Mr. Weisbart said the fraud cost could rise to $241 million in 2010 if no reforms are enacted.
He said about 20 percent of the cost of every no-fault claim in the state is attributable to fraud and abuse, totaling about $1,561 per claim in 2009.
That figure could rise to $1,644 in 2010, he said, and he called the per-claim cost a "fraud tax" on the state's drivers.
New York sits third among states–behind Michigan and New Jersey–in average no-fault claim severity as of the 2009 fourth quarter, according to Mr. Weisbart.
But he said New York is first among states as far as the growth rate in severity from 2004 to 2009. No-fault claim severity has increased by 48.5 percent in the state during that time, he said.
More money is being paid out, Mr. Weisbart said, but not because of a rise in accidents or claims, which have held steady over the last several years.
Rising medical costs also do not account for the sharp rise in severity, he explained. Mr. Weisbart pointed to a graph showing the average New York no-fault claim severity rate of increase outpacing the medical care index rate of increase.
The problem in the state mirrors similar problems in New York in the 1990s through to the early 2000s. Mr. Weisbart said no-fault fraud was highlighted in major New York newspapers in front-page stories and editorials from 2001-2002.
After the publicity and resulting reforms, claim severity fell through 2003 and 2004, dropping below the U.S. average, Mr. Weisbart said. But since the end of 2004, he said claim severity has again escalated to over twice the U.S. average.
Mr. Weisbart said no-fault fraud accounts for about half of all suspected fraud reports in the state. Without no-fault fraud, he said, total suspected fraud repots would be on the decline in New York.
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