Car Insurance Central

In the second quarter of 2009, the average no-fault payment for the medical care of accident victims in the state of New York rose by 56 percent to $8,748 per claim. Compared with the last quarter of 2004, this is a substantial increase. At that time the average no-fault payment stood at $5,615 per claim. This is based on information collected by the Insurance Information Institute (I.I.I.).

Suspicious claims are being forcefully investigated by the insurance industry, the National Insurance Crime Bureau, national law enforcement agencies and the New York State Insurance Department’s (NYSID) Frauds Bureau, says I.I.I. president Dr. Robert Hartwig, who is also an economist. But there are still loopholes that the no-fault system contains that apparently make it on the whole susceptible to fraud and abuse. This fraud comes from what has been termed a “no-fault industry” containing corrupted attorneys, medical professionals, and the criminals who are working on their behalf.

Dr. Hartwig says that in a period of fewer than five years, the auto insurance industry in the state of New York has witnessed an amazing increase of 56 percent in the average cost of no-fault claims. He says that to a large degree this is the result of abuse and even out and out fraud within the system. He said this in a speech that he delivered to the annual meeting of the New York Insurance Association, at their meeting in Latham, NY. He added that the expense of this fraud and abuse of the state of New York’s state’s no-fault system is in the end an expense that must be met by the honest policy holders in the state. The cost for no-fault claims in New York now stands as the second highest in the US being over twice as high as the country’s average of $4,152.

The president of the New York Insurance Association, Ellen Melchionni, says that state legislators will have to make no-fault auto insurance reform a high priority issue when they come back from their recess to Albany for their 2010 session. She says that external forces are acting to force up the cost of auto insurance in the state, and that these are factors that need to be contained.

In its Annual Report for 2008, the New York State Insurance Department’s Frauds Bureau, reports that since 2006, no-fault fraud events being reported have increased by 22 percent. Previous to this, between 2003 and 2006, the number of these reports had fallen by 35 percent, according to Dr. Hartwig. Also in its 2008 annual report the Frauds Bureau had notably increased its number of no-fault investigations.
In fact any auto insurance program that permits policyholders to recover financial losses, may be termed as "no-fault" auto insurance, a term that is often used to denote such insurance that allows the recouping of medical costs and lost wages, from one’s own insurance company, without regard to who is at fault. This is a benefit referred to as no-fault coverage that is listed under the personal injury protection (PIP) provision of one’s policy.