IIAANY Praises N.Y. Department, Nassau County Prosecutor Following Arrests

August 5, 2002

The Independent Insurance Agents Association of New York Inc. has commended the state Insurance Department and Nassau County District Attorney’s Office for their roles in filing charges against nine individuals recently accused of workers’ compensation fraud. The Syracuse-based trade association said the arrests and prosecutions to follow send a strong message that the department and law enforcement officials in New York are serious about fighting insurance fraud.

“The crackdown in Nassau County is among the latest examples of the aggressive campaign being waged statewide against insurance fraud,” IIAANY Chair of the Board John Costello said. “However, it comes at a time when the incidence of fraud, based on Insurance Department figures, is growing at an alarming rate.”

In 2001, more than 26,000 cases of insurance fraud were reported to state officials, an all-time high. Fifty-eight percent (15, 219) were in the area of no-fault auto insurance fraud. In 1999, there were 19,196 reports with 49 percent (9,191) stemming from no-fault fraud alone. From 1999 to 2001 there was a 66 percent increase in no-fault reports of insurance fraud. As a result, no-fault fraud and abuse has become the number one rate driver in New York’s auto insurance marketplace, according to the Insurance Department.

Last year, the Pataki Administration proposed a comprehensive package of reforms to confront the massive level of fraud plaguing the no-fault system at an estimated cost of $1 billion a year. In April, the state Senate passed the proposals, which IIAANY generally supports. They would increase penalties and allow insurers additional time to investigate cases of potential insurance fraud.

“While Gov. George Pataki and members of the state Senate have acted responsibly,” Costello continued, “inaction by the Assembly leadership gives the cheats and the unscrupulous continued license to exploit the state’s no-fault auto insurance system. We call on the Assembly to not wait a day longer and give the Insurance Department and law enforcement officials the ammunition they need to battle this enormous problem.”

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