PIANY Says Increased Motor Vehicle Fees are Misdirected

May 1, 2003

The Professional Insurance Agents of New York State Inc. has issued a statement indicating that the state budget proposal to raise the current $1 annual Motor Vehicle Law Enforcement Fee to $5 is misdirected.

“If the state must increase these fees, they should be designated to fight auto insurance fraud and auto theft–two crimes that are linked to auto insurance costs,” said the PIANY.

In addition to raising the fees, the proposed bill would allow counties and New York City to impose up to an additional $5 per vehicle (including motorcycles) in fees annually for local law enforcement. In its current form, the proposed bill, S.1406-a/A.2106-a, states that the local fees must go toward “local law enforcement efforts,” which need not even be auto-related.

“Because of New York State’s rampant fraud problem, the cost of auto insurance continues to rise,” stated PIANY President David Isenberg “Any additional fees raised by the budget bills should be allocated to programs that are designed to combat fraud and decrease consumers’ insurance premiums.”

The proposal would direct the bulk of the state money to “the state operation expenses of the division of state police including, but not limited to, the costs of activities relating to highway safety and public security.” The proposal maintains the current cap, at $9,100,000 annually, on the money going into state police activities relating to the detection, prosecution or reduction of automobile theft and related purposes.

“However, the excess above $9,100,000 no longer would go into the Motor Vehicle Theft and Insurance Fraud Prevention Fund,” said the bulletin. “This fund, which PIANY regards as the most important element of the entire fee system, will be capped at $4,700,000 annually.” The announcement stressed that, “it is from this fund that more moneys could be made available to support local prosecution efforts targeting auto insurance fraud, a goal that PIANY believes is essential to deterring future criminal activity.”

“Between the additional state fees and the new fees localities could charge, it is likely the drivers’ fees will increase tenfold, without any guarantee that the money will go to programs dedicated to decreasing insurance premiums,” said Isenberg. “Should this increase take place, those paying won’t reap any direct benefits.”

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