New York Senate OKs Legislative Package to Fight Auto Insurance Fraud

May 10, 2013

The New York State Senate approved three bills that aim to cut down on auto insurance scams by increasing penalties for those who commit or assist in the fraud and by giving more flexibility to insurance companies to prevent criminals from getting policies and continuing to commit auto fraud.

This anti-auto fraud legislative package, approved by the New York Senate on May 8, has been sent to the Assembly. These measures include the following:

• Bill (S3547), sponsored by Sen. James Seward (R,C,I- Oneonta): makes it a class D felony crime to stage a motor vehicle accident with intent to commit insurance fraud. If a staged motor vehicle accident results in serious injury or death, the person who staged the accident could face a maximum sentence of up to 25 years.

“Staged accidents hike auto insurance rates for all and pose a serious public safety risk as well,” said Sen. Seward, chairman of the insurance committee.

Women and elderly drivers are in particular danger, Sen. Seward said: “They are often targeted because they are less likely to be confrontational after an accident, making it easier for criminals to take advantage of them. The Senate has recognized the need for change for some time and the Assembly needs to join the effort so we can put these criminal enterprises out of business for good.”

According to the National Insurance Crime Bureau, insurers across the country reported a 102-percent increase in suspected cases of staged auto accidents between 2008 and 2011.

• Bill (S3033), sponsored by Sen. Dean Skelos (R, Rockville Centre): makes it illegal (either a class A misdemeanor, class E felony, or class D felony) to act as a “runner” for fraudulent providers. Under this bill, runners and their associates could face up to seven years in prison.

“Runners and other street-level criminals that participate in these enterprises steal from all of us in the form of higher insurance premiums and fake medical billing,” Sen. Skelos said. “We need to enact tough penalties that keep runners and other complicit individuals from taking advantage of New York’s no-fault system and profiting from their auto fraud-related crimes.”

• Bill (S1959A), sponsored by Sen. Martin Golden (R-C, Brooklyn): allows insurance companies to retroactively cancel policies taken out by people who commit auto fraud. These criminals often take out policies and pay for them with bad checks or stolen credit cards just before they stage accidents. Under current law, insurance companies cannot cancel the policy and policyholders wind up paying for it through higher premiums.

This measure would bring New York in line with the other large no-fault states and remove any incentives for staged accidents. The New York Senate said only seven other states (Arizona, Colorado, Kansas, Maine, Maryland, North Carolina and South Dakota) do not allow for retroactive cancellation. Innocent victims of uninsured drivers would be covered under their own policy or the Motor Vehicle Accident Indemnification Corporation.

New York Among Top 5 States for Fraudulent Auto Insurance Claims

According to the National Insurance Crime Bureau, New York ranks among the top five states for fraudulent auto insurance claims.

Earlier this year, the New York City Council held a public hearing on auto insurance fraud. At the hearing, Brooklyn Assistant District Attorney Jeff Ferguson said 36 percent of insurance claims are either fraudulent or inflated and added that, “Some 22 percent of those claims were entirely bogus, while another 14 percent included inflated injuries and unnecessary treatments to gouge money from insurance companies.”

“New York is awash in a tsunami of insurance fraud. It is very encouraging to see the Senate take action on an issue that impacts so many New York State residents. The passage of these measures is critically necessary to stem the rampant fraud in the automobile no-fault system,” said John Corlett, legislative committee chairman for AAA New York State, an association serving 2.7 million drivers in the state.

Source: the New York State Senate

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