People in the city of New York are being plagued by increasing auto insurance fraud which has now reached crisis levels. Those advocating reforms in the auto insurance system has voiced their concern loud and clear and certain measures are being taken to curb this menace at the earliest.
Senator James Seward, a member of the New York Senate, passed a bill on March 23rd according to which intentional vehicle collision will be termed as “felony”. This bill, aimed at curtailing criminals preying on unwitting motorists to claim auto insurance money, is currently awaiting its passage through the NY State Assembly.
The NY Senate Insurance Committee meeting was held on April 26th and was well attended by representatives of insurance companies as well as consumers who arrived to discuss the provisions of the reform and also other ways in which auto insurance fraud could be curtailed.
A statement was issued by the PCI (Property Casualty Insurance) Association of America stating that it cost a loss of over $240 million in 2010 alone as a result of auto insurance fraud. The statement also mentioned that New York ranks high in the list of states with high insurance premiums because of the rising fraud which has pushed premiums northward. Auto insurance fraud, coupled with malpractices or medical providers, has driven the cost up over the last few months.
Representatives of the PCI also said that though New York City is one of the cities that is most plagued by no fault auto insurance fraud, the entire state is reeling under its effect. This has led to a dramatic rise in the cost of insurance policies throughout the state. While Brooklyn drivers paid 187 percent more than the state average for their premiums, residents of Bronx have had to shell out 272 percent more than the average across the state.
PCI’s AVP President, Kristina Baldwin, said that it is the residents of New York City who have suffered the most for long and have a right to call for reforms to reduce this problem. She also said that the system for no fault insurance in the state has a lot of loopholes that need to be fixed with immediate effect.
A statement issued by the Insurance Information Institute revealed that the people of New York paid approximately $204 million last year as a part of the “Efraud Tax”. This was the second consecutive year for which this amount exceeded $200 million. The organization also emphasized the fact that the no fault system needs to be changed at the earliest to curtail the crisis levels.
