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June 2001 |
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From the New York State Assembly  Sheldon Silver, SpeakerAlexander B. Grannis, Chair, Insurance Committee |
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| Assembly passes legislation to drive down auto insurance rates Measure cracks down on insurance fraud |
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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.
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"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 |
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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.
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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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