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Auto insurance fraud may be rising in New York

No-fault auto insurance claims are rising steeply in New York State, the Insurance Information Institute says.

The average no-fault auto insurance claim in the second quarter of 2009 was $8,748 – a 56 percent increase from late 2004. The “extraordinary increase” was “to a great extent the result of abuse and, sometimes, outright fraud in the system,” said III president Robert Hartwig.

Insurance officials believe there’s an industry devoted to exploiting the loopholes in no-fault auto insurance. Corrupt medical professionals and attorneys are largely to blame, the III contends. No-fault fraud reports increased 22 percent between 2006 and 2008, the state Insurance Department Frauds Bureau says – the same timeframe in which the average claim increased significantly.

No-fault auto insurance claims are made to a policyholder’s own insurance company when the policyholder alleges financial losses. Medical costs and lost wages are typical no-fault benefits.

The III suggests that burden of proof requirements be strengthened for medical professionals so that fraud is more difficult to perpetrate. Also, the institute adds, New York should have protocols in place for auto accident-caused maladies. At present, there is a generous $50,000 ceiling on the medical treatments that can be paid by auto insurance companies.

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Posted: November 06, 2009

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