NY Questionable Car Insurance Claims Up 16 Percent Since 2008

The National Insurance Crime Bureau (NICB) released Wednesday its latest analysis of questionable insurance claims for New York, which showed that between 2008 and 2010 the state saw an increase of 10 percent in the total number of claims identified as having possible elements of fraud.

The vast majority — 80 percent — of those were related to personal auto coverage, with the number of questionable auto claims increasing by a total of 16 percent between 2008 and 2010.

NICB NY Questionable Insurance Claims Counts

Click graph to enlarge

“Questionable claims are those claims that NICB member insurance companies refer to NICB for closer review and investigation based on one or more indicators of possible fraud,” according to the organization.

Of the types of referred auto claims, Personal Injury Protection (PIP) saw the greatest growth during the three-year period. The total number of referred PIP claims grew 32 percent during that time, going from 993 in 2008 up to 1,312 in 2010.

The increase in possibly fraudulent PIP claims may spur attention to current campaigns by legislators and regulators to reform the state’s no-fault insurance system.

PIP, also known as no-fault coverage, pays for a policyholder’s medical bills resulting from auto accidents, regardless of fault.

According to regulators, researchers and insurers, many individuals abuse the no-fault system by inflating medical costs, staging accidents and getting unnecessary medical treatments, which ultimately raises premiums for all.

The NICB statistics give some credence to those assertions. They showed that the numbers of questionable claims involving excessive treatment and staged accidents both increased between 2008 and 2010. Numbers of claims appearing to involve staged accidents rose 38 percent and excessive treatment 83 percent during that period.

The state Senate has already taken action to deter criminals from staging accidents in order to collect on claims. In March, it passed legislation making staging accidents a felony offense. The Assembly, however, has yet to take up the bill.

A more sweeping reform of the no-fault system remains in the Senate Insurance Committee, where it was first introduced.

That bill was called “a comprehensive package of measures that would enact necessary reforms to the system” by the assistant vice president of the Property Casualty Insurers Association of America, Kristina Baldwin.

It would lengthen the amount of time that insurers have to contest possibly fraudulent claims (N.Y. insurers must currently pay claims within 30 days of their filing), require documentation showing that certain medical treatments are necessary and set a stricter schedule for medical billing.

The NICB report showed that the fraud problem is especially pronounced in New York City, which generated about 27 times more questionable claims in 2010 than the city with the next largest questionable-claims count (Buffalo).

The Insurance Research Council (IRC) released a report in January quantifying the cost-inflation issue for claims in New York City. According to the IRC, “the typical PIP claims payout for claimants in the New York City area was nearly two times the payout for claimants in the rest of the state,” with New York City claimants appearing “much more likely to seek treatment from chiropractors, physical therapists and acupuncturists than their upstate counterparts.”

A similar debate is taking place over the Florida auto insurance system, which also is host to allegedly rampant PIP fraud.


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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