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No-fault insurance system comes under fire in New York

State lawmakers and insurance experts in New York are looking into reforms of the state’s no-fault insurance system after a report indicated that the cost of no-fault claims has spiked

Insurance groups, trial lawyers and physicians agreed at a recent summit that New York’s no-fault insurance system needs reform.

Fraud within the no-fault system is a serious concern among insurers and lawmakers, especially after the release of a November report from the Insurance Information Institute saying that the cost of no-fault claims in the Empire State rose 56 percent between 2004 and 2009.

Under no-fault coverage, policyholders can file a claim with their own insurance company for lost wages and medical expenses, irrespective of who caused an accident. Fraud rings involving doctors, medical clinics and attorneys have appeared in New York to exploit the system.

Late in 2009, New York’s State Insurance Department proposed that
insurance companies be allowed to dispute seemingly fraudulent medical claims.

Fraud affects all insurance policyholders: Greater numbers of fraudulent claims mean higher insurance premiums for honest drivers.

New York has the third-highest auto insurance costs in the country, according to the National Association of Insurance Commissioners.

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Posted: February 2, 2010

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