June 2001
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From the New York State Assembly  Black Square  Sheldon Silver, Speaker
Alexander B. Grannis, Chair, Insurance Committee
Assembly passes legislation to drive down auto insurance rates

Measure cracks down on insurance fraud

The Assembly has approved a measure (A.8654-D) to help protect consumers from run-away auto insurance rates by cracking down on fraud –– a crime that costs New York drivers more than $1 billion per year.

Auto insurance rates in New York have skyrocketed over the past five years due to exploitation of the state’s no-fault insurance law. As a result, New York now has the dubious distinction of ranking second in auto insurance rates, and unfortunately we have a real chance at taking over the top spot if something isn’t done.

The bill creates a balance by giving law enforcement, regulators and insurers the tools they need to crack down on fraud, while including checks against abusive insurer practices.

Providing immediate rate relief

The Assembly legislation calls for a freeze on auto insurance rates until January 1, 2003, a 17 percent reduction in personal injury premiums to ensure consumers see the savings expected from the reform, and includes measures to hold both insurers and those defrauding the system more accountable. Insurers who do not meet the target decrease would need to provide a detailed explanation to the State Insurance Department (SID). The bill also requires an audit of insurer compliance with the excess profits law.
"The reforms and measures proposed in this legislation will go a long way towards addressing spiraling insurance costs and we urge that these reforms are enacted this session.

"If these reforms are not enacted, the current fraud crisis will worsen and New York motorists will be burdened with the highest auto insurance costs in the nation."

Marta Genovese
AAA New York State

Combatting fraud

The bill creates a special fraud prosecutor and allows local district attorneys to conduct more investigations and prosecutions using $2.2 million set aside in the Assembly’s budget proposal.

It also creates an Independent Office of Public Insurance Consumer Advocate to represent the interests of auto and health insurance consumers in rate hearings and other matters before the Insurance Department, based on an effective Texas model.

To help insurers detect phony bills earlier, the Assembly measure would provide for stricter accounting of medical costs incurred for injured drivers and passengers by setting a 30-day deadline for health care providers to send notice of initial medical treatment and a 60-day billing deadline.

In addition, it creates felony level penalties for "runners" –– individuals who recruit clients and facilitators to stage accidents for the purpose of scamming insurers.

Ongoing efforts to help working families keep more of their hard-earned dollars

Putting a lid on auto insurance costs builds on the Assembly’s commitment to make New York State a more affordable place to live and raise a family.

The Assembly has consistently worked to lower energy costs, and has cut taxes by nearly $13 billion since 1994 for businesses and working families.

We recently passed far-reaching legislation addressing New York’s energy crisis and protecting consumers from soaring prices. The measures lower energy costs –– including gasoline –– for consumers, and help create jobs in communities across the state.

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