No-Fault Auto Insurance Costs Go Up in New York


Major Insurance companies and agencies in New York worry that the no-fault payments to cover medical claims by car accident victims have been strikingly increasing over the past couple of years. Concerned industry groups say that insurance companies and state authorities need to closely work hand-in-hand to reinforce efforts to wipe out abuse, fraud, and other wastes in order to have downward force on those costs.

No-Fault Auto Insurance Costs Go Up in New YorkReports from the Insurance Information Institute say that most of New York’s auto insurance companies have been observing that their average no-fault payments spent for medical and health expenses of accident victims went up by 56%, which now amounts to roughly $8,748 per claim during the second quarter of the year 2009. At present, costs of the state’s no-fault claim ranks second highest in the United States. Insurance Information Institute reports emphasize that during 2004, average no-fault payment was only $5,615 per claim. Industry insiders blame cost inflation to this continued increase of fraudulent auto or vehicle insurance claims.

In his speech addressed to the New York Insurance Association, Insurance Information Institute President, Robert Hartwig, said that the National Insurance Crime Bureau, the New York State Insurance Department, the insurance industry, and the state’s law enforcement authorities persistently continue to probe on doubtful auto insurance claims. In addition, it has been reported that Robert Hartwig clarifies that efforts to safeguard the integrity of the New York auto insurance system is there; but the very nature of the state’s no-fault system is part of the problem. Part of the blame for steep no-fault payments goes to loopholes that make this system predominantly vulnerable to what is described as a fraudulent ‘no-fault industry’ composed of street-level criminals, corrupt lawyers and medical practitioners, and scam artists. What is worse, the burden of fraud and abuse costs in no-fault claims is being carried by honest and hardworking policyholders of New York State.

New York Insurance Association President, Ellen Melchionni, called the attention of state lawyers and asked them to study the current scenario and plan a reform for the no-fault auto insurance system. According to reports, Ellen Melchionni believes that there are outside forces that contribute to the rising auto insurance costs which, if carefully analyzed and dealt with properly, can be controlled and even eradicated.

While lawmakers are still doing the best they can, state recommended solutions to immediately rectifying this situation includes requiring proof of accident damages and injuries, streamlining claims processes, strengthening anti-runner laws, and strictly enforcing enhanced penalties for parties who participate in fraudulent insurance claims.