Preliminary findings from a new study confirm that the New York City metro area is a hotbed for auto insurance fraud and drivers are paying for it.
Analysis by the Insurance Research Council (IRC) finds that no-fault auto insurance claims costs are far higher in the NYC metro area than in the rest of the state and there is significant evidence of increased utilization of medical care.
Elements of fraud appeared in 22 percent of all NYC metro area no-fault auto insurance claims (known as personal injury protection (PIP) claims) closed in the fall of 2010, while another 14 percent appear to involve either overbilling or excessive utilization of medical services.
In contrast, when IRC looked at PIP claims filed in the rest of the state, only 4 percent of closed claims appeared to be fraudulent, while signs of claims buildup were seen in just 4 percent of upstate PIP claims.
Auto injury claimants in the NYC area are seeing more doctors and going for more visits.
The IRC found that some 44 percent of NYC area PIP claimants visited four or more health care providers in 2010, whereas only 14 percent of claimants elsewhere in the state did the same.
NYC claimants were also much more likely to seek treatment from chiropractors, physical therapists, and acupuncturists than their upstate counterparts.
The typical PIP claims payout for claimants in the NYC area in 2010 was nearly double the payout for claimants in the rest of the state.
The Wall Street JournalÃ¢â‚¬â„¢s Metropolis blog has more on this story.
As weÃ¢â‚¬â„¢ve noted before, when claim costs rise due to fraud, policyholders are forced to pay for it through higher premiums.
Insurance Information Institute (I.I.I.) analysis shows that fraud in the New York no-fault system accounts for roughly 20 percent of every no-fault claim paid Ã¢â‚¬“ or about $1,561 per claim.
As a result, in 2009 policyholders paid the equivalent of a $229 million tax on their auto insurance policies due to these unethical and often fraudulent activities.
Check outÃ‚ further I.I.I. information on insurance fraud.