New York Gets Tough on Car Theft and Insurance Fraud

Auto insurance fraud is not a victimless crime – it costs New York’s consumers and insurers millions of dollars annually in the form of higher premiums and increased prices for goods and services. In New York City alone, officials estimate that fraudulent auto claims add $241 million to premiums.

In an effort to put the brakes on motor vehicle theft and insurance fraud in New York’s no-fault auto insurance system, the state is committing almost $4 million in grant funding to be distributed between 29 local police departments, district attorneys’ offices and other related agencies.

The grant is provided through the state’s Motor Vehicle Theft and Insurance Fraud Prevention program, which is managed by a 12-member board that develops the state’s tactics for fighting insurance fraud and auto theft. The board also checks grant applications and approves the grant awards.
Administered by the state Division of Criminal Justice Services, the grant program is funded through a $10 fee charged on insurance policies issued for vehicles registered in the state.

Grants will be used to subsidize salaries for assistant district attorneys and investigators assigned to manage motor vehicle theft and insurance fraud cases; expanded enforcement and sting operations; and for specialized training for investigators, police officers, and prosecutors.

In 2012, the Insurance Frauds Bureau of the state’s Department of Financial Services received 18,677 incidents of suspected motor vehicle insurance fraud, a 9 percent increase from the previous year, when 17,121 suspected incidents of fraud were reported.

The current laws contain huge loopholes that enable criminals to exploit New York’s no-fault auto insurance system. Numbers tell the story of wide-ranging, costly fraud and abuse:
•    New York’s average no-fault claim cost is 56 percent higher than the national median of $5,135.
•    The average claim has increased by $2,146, or 36.5 percent, since 2004.
•    Healthcare costs for automobile accident victims in New York City increased 70 percent in the last decade, more than 20 percent faster than in the rest of the region mainly due to increased fraudulent, criminal activity.

The administration’s plan to curb no-fault automobile insurance fraud includes:

•    Expanding the state’s ability to perform unannounced facility audits and inspections of healthcare providers participating in the no-fault auto insurance system
•    Prohibiting fraudulent providers from receiving payment
•    Fining providers for engaging in illegal activities

The New York Insurance Association is pushing for lawmakers to make it easier to remove fraudulent medical providers from the no-fault system by passing more stringent measures this year, including:

•    Staging an auto accident will become a felony
•    Ending fraudulent billing from fly-by-night durable medical equipment providers
•    Permitting retroactive cancellation of fraudulently obtained auto policies
•    Requiring providers to prove that a treatment is medically necessary

Recognize 5 common auto insurance fraud schemes

•    Staged accidents – After an accident, immediately gather as much evidence and detailed information as possible.
•    The windshield replacement offer – A stranger in a parking lot tells you he’s with a vehicle glass company and you need a new windshield – which he can install  free of charge if you provide your insurance information. Once they have your insurance information, a crook will often charge your auto policy for several windshield replacements without you knowing it.
•    Agent fraud – The dishonest agent takes your money but doesn’t actually set up the coverage.
•    Towing scams – A tow truck driving by after a breakdown or accident may likely be a “bandit” tow truck (especially if you didn’t call for a tow). You’ll end up with a large bill for the tow. Don’t accept a tow unless you called the company first.
•    Counterfeit air bags – Crooked repair shops frequently replace the bags with low-quality knockoffs. You should only deal with reputable mechanics.

Report Suspected Insurance Fraud
Cases of suspected insurance fraud can be reported confidentially to the Department of Financial Services by telephone, mail or fax.

Do you think these new laws will decrease fraudulent claims? Feel free to share your thoughts in the comments section below.