View from the Assembly

By state Assemblyman Will Barclay

New York state has the unfortunate distinction of being a high cost-of-living state, and when it comes to auto insurance, New York lives up to its reputation.

Our auto insurance rates are among the highest in the nation. Although there are several reasons for our high rates, fraud plays a large part.

According to the state Department of Financial Services, the agency that oversees insurance in our state, about 36 percent of all auto insurance claims contain some element of fraud, resulting in higher e premiums for everyone.

New York state requires motorists carry a minimum of auto insurance that covers bodily injury and property damage and provides for no-fault coverage.

Because this insurance is mandatory, I believe the state has a special interest in ensuring state motorists’ rates accurately reflect an insurance company’s underlying costs.

When fraud is added into the formula however, it perverts this calculation and creates higher insurance costs for all motorists.

According to the Insurance Information Institute, no-fault fraud and abuse in New York state cost consumers and insurers about $229 million in 2009. The Institute further reports that when this extra cost of fraud is calculated on a per claim basis, it adds $1,644 per claim, or 22.4 percent of the cost.

According to the state Department of Financial Services, no-fault insurance fraud takes many forms. It occurs when (i) a driver and a body shop worker agree to inflate the auto damage claim and share the “profit,” (ii) a doctor bills an insurer for services that were not provided, or (iii) a driver stages a fake accident, and unscrupulous doctors and lawyers help “handle” the medical claims and lawsuits.

To combat this fraud and, hopefully as a result, reduce auto insurance premiums for policyholders, I have introduced the New York Automobile Insurance Fraud and Premium Reduction Act.

This legislation provides a comprehensive solution to no-fault auto fraud by addressing the issue from all sides. While there are many facets of this legislation, four of the legislation’s major provisions are as follows.

First, in effort to combat fictitious or unnecessary medical treatment usually emanating from a staged accident, my legislation would direct the establishment of medical guidelines to be employed in the evaluation and treatment of injuries sustained in any auto accident. It also requires pre-certification for certain treatments and equipment to curb fraudulent over-utilization of medical treatments.

Second, the legislation creates a monetary incentive of between 15 percent and 25 percent of an amount recovered (up to $25,000) for persons who report suspected insurance fraud to law enforcement authorities.

Third, to make people think twice before committing no-fault fraud, my legislation expands the definition of insurance fraud and increases penalties for insurance fraud violations.

Finally, to ensure that whatever reduced costs insurers receive as a result of the enactment of this legislation are passed on to the policyholders, my legislation requires the Superintendent of Insurance to recommend an appropriate one-time no-fault premium reduction for every insurer, by rating territory, equivalent to the insurers’ cost savings. This recommendation would be binding on insurers unless the insurer can show that such a reduction would result in an underwriting loss.

I recently participated in an Assembly Insurance Committee hearing in Albany regarding auto insurance in New York. Many who testified, including those from the insurance industry and from consumer groups, complained about the high costs of auto insurance.

It is my hope they will get on board with my legislation and together we can work to get it passed so New Yorkers can at last begin to see a decrease in their auto insurance premiums.

If you have any questions or comments or if you would like to be added to my mailing list or receive my newsletter, contact my office by mail at 200 N. Second St., Fulton, NY 13069, by e-mail at barclaw@assembly.state.ny.us or by calling 598-5185.

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One thought on “View from the Assembly”

  1. Dear Assemblyman,
    I have to disagree with your assessment.
    First, “fraud” includes in their calculations any denied claims — including those later found to be very wrongfully denied! Thus, the figures are very flawed to start with.
    Second, anyone who has ever been injured, or who represents the injured, knows that insurance companies spend a great deal of money flying in out of town doctors who see dozens of patients in one day (it’s not unusual for them to see over 80 in one day), who seem to be chosen due to their proclivity to deny any further treatment. Then treatment prescribed by LOCAL treating doctors who all operate small businesses in NYS are denied.
    Third, using common sense, look at the amount of money these carriers spend on ads. If it wasn’t extremely profitable for them, do you think that we’d see so many ads?
    Fourth, look at how many doctors do not take No Fault any more due to the aggressive, unchecked practices of the insurance carriers, and then really examine who the cause of the insurance problem is.
    It is not the injured or the medical providers, it is the carriers. Our elected officials should be standing WITH the injured and WITH our local doctors and not against our own in favor of out of state insurance companies who regularly deny valid claims.
    If you need any further information on this, please contact me at the above email or though our firm website. We represent clients referred by other attorneys and for many medical providers in filing No Fault arbitrations of wrongfully denied claims. Thus, we are in the trenches on this issue. The carriers have constant communication with our elected officials and there is not an equal amount of information containing the real facts given by those actually affected. Therefore, if you want to know what is happening to injured parties and medical providers, please contact me.
    I wish you all the best.
    Jeanne Vinal

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