NY Senators Make Case for Auto Insurance Reform

Fraud and abuse of the New York no-fault auto insurance system is stretching the resources of law enforcement agencies and coverage providers to the point of being unsustainable, according to representatives testifying at a meeting of the Senate Insurance Committee on Tuesday.

Other speakers, though, called into question the severity of the crisis and raised concerns that proposed reforms could end up making it more difficult for legitimate claimants to get their medical bills paid by their car insurance companies.

The hearing was called by Sens. James Seward and Martin Golden, who together have introduced a handful of bills that would alter aspects of the no-fault insurance claims process.

Representatives from trade associations and insurance companies, who had been invited to speak by the senators, testified that abuse of the no-fault system cost New York drivers and insurers more than $200 million last year.

Speakers at the meeting continually noted that there was not one “silver bullet” that would cure the existent issues, but that the proposed bills to make effective, fundamental changes.

Among the problems cited as contributing to the no-fault problem were staged accidents, unnecessary treatment, mandatory timelines for claims payments, a lack of funds for anti-fraud task forces and an absence of cost-containment measures.

The pair of senators have introduced a trio of bills relating to no-fault insurance.

Golden’s bill would retroactively cancel coverage for policyholders who purchased a policy through fraudulent use of a credit card or with a bounced check. The catalyst for this measure is that many fraudulent claims are said to be filed within the first 60 days of a policy, and that some fraudsters purchase a policy through surreptitious means with the intent of committing insurance fraud.

One of Seward’s bills would make staging an accident a felony. This first would provide greater disincentives for committing fraud and second would make it easier for law enforcement to investigate cases of possible staged accidents.

The other bill by Seward includes more sweeping reforms that include expanding the time frame insurers have to pay claims, creating fee schedules and changing the way contested claims are handled in the judicial system.

But opposition was voiced toward the end of the meeting.

Representatives of trial lawyers in the state said hundreds of millions of dollars being siphoned off through fraud is nothing compared to the billions collected in premiums every year, and that the true impact of no-fault fraud has been inflated.

They expressed worries about medical-treatment guidelines possibly turning into a slippery slope.

While voicing opposition to proposed reforms, these representatives told the committee that they would not be opposed to the implementation of an auto-fraud task force.

New Yorkers must purchase, by law, at least $50,000 in personal injury projection coverage (the main type of no-fault auto insurance) in order to be on the road legally.

About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

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