NY Legislators Seek to Rein in Rates Through Fraud Prevention

uptown manhattanIn a move that supporters say will “improve highway safety and reduce insurance costs for all,” the New York State Senate on Tuesday passed a bill that that would make it a felony to stage auto accidents in order to cash in on claims payments.

If the measure gains approval in the assembly and is signed into law, individuals convicted of intentionally being involved in a car crash would face up to seven years in prison for a first offense.

New York has been pegged by the National Insurance Crime Bureau (NICB) as the state with the second-highest annual number of staged accidents, and New York City is reported to have the highest number of staged accidents of any city in the nation.

According to a report recently released by the New York Department of Insurance, the annual volume of collision fraud reports made to the state’s fraud bureau has increased by about 31 percent since 2007. In 2010, there were 1,654 reports filed.

Sen. James Seward, the main author of the bill, said before the bill’s passage that fraud and abuse of the no-fault system resulted in around $241 million in higher premiums to residents statewide last year.

Seward also said that beyond reducing the number of fraudulent claims being paid out by New York auto insurance companies, the change would make the state’s roads safer.

“In a staged accident, the particpants risk their own safety, their targets’ safety, as well as the safety of the general motoring public,” Seward said in the senate chamber on Tuesday.

The bill text makes mention of a 71-year-old woman who, in 2003, actually died as a result of a staged crash. Seward said that the woman, Alice Ross, was hit from behind and run off the highway by a group of men looking for a victim to use in the accident.

“Women and elderly drivers are in particular danger because they are often targeted for these accidents,” the bill reads, “because they are less likely to be confrontational after an accident, thereby making it easier for criminals to engage in this activity.”

The proposed law would make engaging in a staged crash that results in serious injury or death an even greater offense. Doing so would be considered a class B felony, which could land convicted criminals in prison for up to 25 years.

Currently, there is no part of the penal code dealing specifically with staged accidents.

Seward has also submitted separate legislation that would address no-fault reform by making changes to the court system and the legal parameters by which the system functions. That bill, though, remains in the insurance committee.

About John Pirro
John Pirro is a licensed fire and casualty insurance agent specializing in various aspects of the auto insurance industry. He worked in the auto body repair industry before taking a reporting position at Online Auto Insurance News.

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