Auto Insurance
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Law-enforcement officials said today that they had cracked an insurance-fraud ring that staged thousands of car accidents and then employed its own network of doctors, acupuncture therapists and fake medical clinics to bilk an insurance company out of $48 million.
Prosecutors and insurance experts said the ring was the largest of its kind ever broken in New York State. A grand jury on Long Island has issued 567 indictments, 86 of which were made public at a news conference here today. Those indicted included doctors, psychiatrists, chiropractors, dentists and nearly 20 bogus health-care clinics that were set up as part of the scheme to defraud State Farm Insurance, the Suffolk County district attorney, Thomas J. Spota, said.
‘’It’s one of the biggest busts in the nation in terms of its breadth, its scope and the dollars involved,'’ said Robert Hartwig, the chief economist of the Insurance Information Institute, an industry group. ‘’We’re talking about bringing down an entire network. It’s analogous to bringing down a drug kingpin.'’
Mr. Spota said the ring used ‘’runners'’ and ‘’crash dummies'’ in cars that would cut in front of other cars, often driven by women with children or by elderly people, slam on the brakes, and cause a crash. The authorities said the investigation dates to 2001, when they received word from insurers who noticed the same names were popping up over and over on insurance claims. One runner was involved with about 1,000 accidents.
Although tales of insurance fraud are well known in New York, Suffolk County investigators and prosecutors said this network, which traces its roots to the heavily Russian Brighton Beach section of Brooklyn, was especially large and complex.
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No-Fault Insurance Failing to Cut Rates; No-Fault Insurance Failing to Cut Rates
Nofault automobile insurance, which was heralded as a costsaver for consumers when it began to spread across the country five years ago, is failing to bring down the price of automobile insurance
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AUTO INSURANCE GAINS IN ALBANY; Outlook for Compulsory Bill Brightens After Series of Behind-the-Scene Talks
The outlook for Senate approval of compulsory liability insurance for all automobile owners brightened materially today because of a series of behind-the-scenes conferences.
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Allstate Blames High Fraud For 10.5% Auto Rate Rise
Allstate, the largest auto insurer in New York, said yesterday that it was raising its rates an average of 10.5 percent in the state, underscoring New York’s growing problem with fraudulent auto insurance claims.
The increases, which will average 11.8 percent in the five boroughs of New York City and in Westchester, Rockland, Nassau and Suffolk Counties, suggest that auto insurance prices and fraud will be a hot issue for the State Legislature, which convened yesterday. Elsewhere in New York State, Allstate customers will pay 7.3 percent more for auto insurance.
The increases, which have been approved by state regulators, are immediate for new customers, and take effect Feb. 17 for older customers.
Though the increase in New York City and the nearby counties was more than four times the average price increase for insurers across the state in 2000, the latest year for which full statistics are available, state regulators said they were not surprised.
‘’This is exactly what we knew was coming,'’ said Joanna Rose, a spokeswoman for the New York State Department of Insurance. ‘’We need some real reform on fraud and abuse.'’
New York already has the second most expensive auto insurance in the country, with an average cost of $943 per car. But state officials worry that New York may soon surpass New Jersey as the most expensive state for auto insurance at an average of $1,043 per car. Auto insurance has become a rancorous political problem in New Jersey and Gov. George E. Pataki does not want it to become a big issue in New York.
Last year, he and Gregory Serio, the superintendent of insurance, presented a series of changes to the Legislature that were intended to reduce fraud. Many legislators said they recognized fraud as a serious problem, but they were unable to act on a bill before adjourning. Some legislators suggested a special session to deal with auto insurance fraud. But ultimately there was no special session.
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51 Are Arrested in Scheme to Collect Millions for Fake Accidents
People came from North Carolina, Minnesota and even the Dominican Republic to collect what they had been told over the phone would be up to $11,000 in insurance money, awaiting them at an office in Long Island City, Queens.
But when they arrived, they were arrested and charged with participating in an auto insurance fraud ring, one that police said billed insurance companies tens of millions of dollars for accidents that never happened.
‘’This is exactly the type of fraud that drives up your auto insurance rates,'’ the New York City police commissioner, Raymond W. Kelly, said at a news conference yesterday. The National Insurance Crime Bureau aided in the investigation.
The 47 people arrested on Saturday in an office on 29th Street were paid a few hundred dollars each to pose as people injured in accidents, the police said. They were told that if they completed a treatment regime, they could also win court settlements of $10,000 to $30,000. Those arrested were charged with insurance fraud, the police said.
Four other people involved in the scheme, including one doctor, were arrested yesterday, the police said.
The false victims, called jump-ins, because in another form of insurance fraud they jump into cars after accidents take place, were recruited by people called runners, who are paid $2,000 to $3,000 for each recruit, according to the police.
Months ago, the police arrested a man they called a ‘’super-runner,'’ Alvin Owens, who was found with five illegal guns and $50,000 in cash, the police said. He was charged with gun possession. The runners also were responsible for falsifying the paperwork for the accidents, the police said.
The commissioner said the police would pursue the rest of the runners, doctors and ringleaders. He said that more than 100 jump-ins remain at large.
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Whitman Moves to Resolve Impasse on Auto Insurance
Gov. Christine Todd Whitman moved today to break a potential deadlock between the State Assembly and the Senate on auto insurance legislation.
Governor Whitman urged Senate lawmakers to go ahead next week and adopt the Assembly’s version of auto insurance legislation, but said she would probably make changes in the bill.
The Assembly version eliminates a 1983 law that places limits on how much insurers can assess drivers living in urban areas. The bill is aimed at reducing premiums for drivers in suburban and rural areas while sharply raising rates for urban drivers. The Senate version does not eliminate the urban limits.
After the Assembly passed the measure on Monday, Mrs. Whitman said she could not support it because it failed to provide savings for all state residents who have good driving records.
With the Senate scheduled to vote on the Assembly bill next Monday, Senate President Donald T. DiFrancesco suggested that Mrs. Whitman speed up the process by using her conditional veto power. If Senate lawmakers were to amend the Assembly’s bill next week to guarantee savings to all motorists with good driving records, the measure would then have to go back to the Assembly, where its approval would be uncertain.
But if the Senate approves the Assembly’s version next Monday, the bill will go directly to Governor Whitman’s desk. The Governor’s staff is drafting changes aimed at keeping the cap for urban residents with good driving records. But the proposal, now under consideration, would remove limits for those urban drivers who have been involved in an auto accident recently or who have moving violations.
The entire Legislature would have to approve whatever changes that Mrs. Whitman made to the measure for it to become law. While Mrs. Whitman is unlikely to face opposition in the Senate for her approach, she may face some difficulty in the Assembly.
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PINK BACKS MERIT IN AUTO INSURANCE; Approves Principle of Reward to Safe Drivers by Cut in Their Premiums ACCEPTS TENTATIVE PLAN Asks Committee of Experts to Get Details Ready in Time for New Rate Schedules
Louis H. Pink, State Insurance Superintendent, approved yesterday the principle of a merit rating plan for automobile accident insurance, which has been worked out by the leading insurance companies and rating agencies in cooperation with the State Insurance Department.
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3 INDICTED IN AUTO INSURANCE FRAUDS; Companies Hunt Band Accused of Obtaining $100,000 Through Fake Accidents. SEEK MEN NOW OUT ON BAIL Cripples Pose as Victims Injured by Insured Cars and Settle Claims, Prosecutor Says.
The indictment of three men yesterday revealed that for several months officials of accident insurance companies had been investigating the activities of a band that was alleged to have obtained more than $100,000 through fraudulent claims.
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2 Insurers Raising Liability Coverage On Bigger Vehicles
With evidence growing that sport utility vehicles, pickup trucks and large vans are causing disproportionate harm to cars and their occupants in collisions, two insurers that together cover nearly 25 million vehicles have quietly begun making drivers of the bigger vehicles pay more for liability insurance.
Officials of the Allstate Insurance Company and the Progressive Insurance Group, the nation’s second- and fourth-largest insurers, said this week that they had begun raising the cost of liability insurance for many big, high-riding vehicles while lowering premiums for the cars that are owned by most Americans.
The Farmers Insurance Group, the third-biggest insurer, plans to adopt similar pricing next year.
‘’People with standard sedans and smaller cars today are subsidizing people with sports utilities and vans and pickups,'’ said Kevin Kelso, who is in charge of auto insurance at Farmers, a unit of the Zurich Financial Services Group.
Out of concern that they would lose some of their best customers, insurers until recently have hesitated to adopt pricing plans that shift costs to owners of the biggest vehicles.
Indeed, State Farm, the nation’s largest auto insurer, announced a new pricing plan on Tuesday that would do just the opposite, reducing the cost to drivers of many larger vehicles for the personal injury portion of their coverage.
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Race for New Jersey Governor Turns to Car-Insurance Reform
James E. McGreevey used a day when the attention of many voters was directed far from New Jersey to outline his plan for reducing the state’s exorbitant auto insurance rates. But he provided few details, and there was little in his proposal that he had not called for four years ago in his last run for governor.
And as much as he promoted his own ideas, Mr. McGreevey attacked the proposals of his Republican opponent, Bret D. Schundler, which include deregulating the auto insurance industry.
Mr. Schundler had no public events today. But his allies in the state Republican Party criticized Mr. McGreevey and his supporters for describing Mr. Schundler throughout the campaign as an ‘’extremist,'’ saying that the Sept. 11 terrorist attacks had made clear the true definition of the term.
‘’Americans have seen the face of extremism in the terrorist attacks against our nation,'’ the state Republican chairman, Joseph M. Kyrillos Jr., said in a statement from Trenton. ‘’For Jim McGreevey and the Democrats to label Bret Schundler an extremist at this time is offensive and irresponsible.'’
A McGreevey spokesman, Richard McGrath, replied that it was wrong to invoke the terror attacks and that ‘’whatever word is used, there is no doubt that Bret Schundler is way outside the mainstream on important issues.'’
Mr. McGreevey said today that as governor he would seek to reduce auto insurance premiums in New Jersey, which are the most expensive in the country, by cracking down on fraud and uninsured drivers.
Mr. McGreevey, who is the mayor here, announced his proposal at a Columbus Day news conference at a local Dodge dealership, weighing in on one of New Jersey’s thorniest issues on a day when most Americans were focused on the military action in Afghanistan.
‘’I think people in New Jersey think about auto insurance every day,'’ he said in response to a reporter’s question.
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