NYID Proposes Auto Insurance Reforms


The New York State Insurance Department (NYID) is planning to change some regulations for no-fault auto insurance in order to help reduce fraud which is hitting many carriers as of late. If not stopped, frauds could contribute to the increase of premium costs for policyholders.

NYID Proposes Auto Insurance ReformsSuperintendent James Wrynn says state regulators are trying to be vigilant to protect the welfare of consumers. He adds that New York car owners do not have to pay extra fees in fraud and abuse tax, referring to the more than 50 percent increase in no-fault auto insurance as caused by the increase in fraudulent claims.

The proposed changes would require policyholders to provide more information on medical forms and reduce the need for additional verification which is currently practiced by New York car insurers. State regulators say the move will not only hasten the processing of auto insurance claims but will also reduce fraudulent claims.

Insurers will likewise be given more freedom in denying health services that are not billed in the fee schedule policyholders comply with. Additionally, insurers will be able easily suspend claims made by medical clinics suspected of fraud or conspiracy thereof. Furthermore, NYID is planning to increase the maximum attorney’s fee.

Wrynn explains that people who are exploiting the existing system must be stopped in order to protect consumers. Since no-fault auto insurance is most vulnerable to fraud, regulators see a strong need to reform it. Regulators say changes are one step towards achieving their goals in consumer protection.

The move is in response to the suggestions of Insurance Information Institute’s Robert Hartwig who cited the state’s poor controls and high limits as the major reason why many corrupt lawyers, medical practitioners, and street-level crooks are making a fortune out of the no-fault industry.

Regulators are pushing for legislative actions to enact the proposals. This includes a state legislation restricting mandatory claim fees and improvements that would equip local police to better investigate arranged car accidents.

No-fault auto insurance fraud is seen by industry specialists as a growing problem in New York State. NYID reports that there are 11,000 fraudulent no-fault claims since the year began, which is already a seven percent increase from its total number in 2008. The number of no-fault fraudsters who were apprehended by authorities went up by 52 percent from 2007 to 2008.

The Property Casualty Insurers Association of American is supporting the claim, saying there must be something done to help reduce the auto insurance premiums of New Yorkers. As of present, New York State is the second highest state to insure a vehicle, with policyholders paying nearly 50 percent higher than the nationwide average.