AAI to Pataki: Sign Bill to Curb Motor Vehicle Fraud

The Alliance of American Insurers (AAI) has urged New York Gov. George Pataki to sign into law a bill recently passed by legislators that would align motor vehicle law with the insurance law regarding the cancellation and non-renewal of insurance covering certain commercial vehicles commonly known as “for-hire” vehicles.

“Under current law, for-hire vehicles are treated distinctly from other commercial vehicles for IIES (Insurance Information Enforcement System) purposes because of the requirement of a 45-day prior notice being sent to the Commissioner of Motor Vehicles before terminating policy coverage, said John Cucci, vice president of the Alliance’s Northeast Region. “This allows a for-hire policyholder to purchase a policy, not pay, and have a 45-day window of opportunity to stage accidents or engage in other fraudulent activity.

“If enacted, S 6865-A would reduce this prior notice timeframe from 45 days to 20 days, slicing 25 days off this window of opportunity for fraud. In addition, the replacement date of the policy would become the termination date. Thus, it would permit for-hire vehicles to be treated in a fashion more in line with other commercial and passenger vehicles.”

Cucci also noted that the reduction in reporting time would help insurers by allowing them to better minimize their risk exposure, and could engender some cost savings by permitting more uniform IIES reports.

IIES is the electronic system used by the state DMV and insurers to report cancellations, non-renewals, reinstatements and notice of no insurance.