Fender Bender

Fight for ‘no-fault" auto insurance reform revs up

By Jeff Jacobson

Coming on the heels of several legislative victories last year, auto insurance reform is shaping up to be one of the issues at the top of the legislative pile for 2012.

Fraud Costs NY is one of several groups pushing for auto insurance reform. Auto insurance fraud currently costs New Yorkers more than $200 million per year. Residents of the state pay higher auto insurance rates than any other place in the country except for Louisiana, Washington, D.C., and New Jersey.

“This is an economic issue, said Austin Finan, spokesperson for Fraud Costs NY. “If residents are expected to tighten their belts during these tough times, the state should make some legislative change to save businesses and families money. We"re calling on the governor to take the lead on this like he has on many other issues.

A bill still in committee is designed to prevent automobile insurance fraud. Advocates say organized criminals stage fake car accidents to charge insurance companies for treating phony injuries to participants, known as “runners.

Under New York law, insurance companies cover medical fees resulting from car accidents up to $50,000, regardless of which party is at fault. This is why the policies are known as “no-fault auto insurance. When scammers take a cut, the insurance company pays, then passes the cost along to drivers.

City Council Member Jessica Lappin said she signed on to the coalition to support a change in state laws to cut down on fraudulent claims. She believes the law is too lenient on people who stage accidents and cheat insurance companies.

“I think it"s costing taxpayers money and people are fraudulently abusing the system. If there"s a way we can fix that's any place we can root out fraud and abuse, we should do it.

Insurance companies and their advocates working to build pressure for reform blame the delay on opposition from politically powerful trial lawyers, who often file car-crash cases.

Groups advocating for insurance reform have worked with the city"s district attorneys to publicize the problem and call for changes. The NYPD, meanwhile, has released surveillance videos from what it says are notorious examples of scammers faking injuries in car crashes.

In one tape, a Bronx driver narrowly avoids a spectacular tractor-trailer crash, but police say he later claimed he was hit and billed $21,184 in medical costs. Another tape shows nine alleged scammers backing three cars into each other's twice's before seeking $39,000 worth of medical treatment, police say.

New York State Trial Lawyers Association President Nicholas Timko flatly denied his members are profiting from fraud, saying auto fraud cases rarely go to court and thus have limited payouts.

“They"re overblowing the problem of fraud, Timko said. “No-fault is probably one of the smallest parts of the premium you pay, and it is usually 10 percent or less of your overall premium. So even if no-fault fraud is 10 percent of that, 10 percent of 10 percent is 1 percent of your overall premium.

He blamed high car insurance rates in New York City on its high population density. “It"s a big city's there are a lot of people…driving cars on busy roads.

This story originally ran in City & State. With help from Allen Houston.