NU Online News Service, Jan.8, 3:29 p.m. EST
Insurance Information Institute President Robert P. Hartwig has reported on a variety of insurer reform proposals to halt the spiraling costs of New York's no-fault auto insurance claims.
In a 24-page report that noted the average cost of a personal injury protection (PIP) claim has soared by 55 percent in the last five years, Mr. Hartwig mentioned recommendations for adoption of a streamlined process for adjudicating claims, revised burden-of-proof requirements, mandated arbitration, medical treatment protocol guidelines, and tougher fraud penalties.
According to the report, New York's no-fault PIP claims average $8,690–the third-highest in the U.S.–which comes out to slightly more than twice the U.S. median figure of $4,268.
The average cost of a no-fault claim has soared 55 percent ($3,075), from $5,615 at the end of 2004 to $8,690 in the third quarter of 2009, Mr. Hartwig reported.
According to the Institute, New York no-fault claim costs, as of the third quarter of 2009, are just 5.9 percent short of their all-time high of $9,235 in the first quarter of 2002.
Mr. Hartwig's report in PowerPoint form also noted a past successful media effort by the insurance industry in 2001 to dramatize the effects of auto insurance fraud on costs.
New York PIP claim severity, once the second-highest in the nation, the report said, fell well below the U.S. average year-end 2004 after a crackdown on fraud abuse. PIP severity, which was averaging $8,597 in the third quarter of 2002, fell to $5,867 in the fourth quarter of 2004, according to the Institute.
Excluding New York, the national average PIP claim severity in 2004′s fourth quarter was $7,060, Mr. Hartwig reported.
No-fault fraud reports, which fell 35 percent between 2003 and 2006, are now on the upswing–rising by 22 percent in 2008 over 2006, according to the Institute and the New York Department of Insurance Fraud Bureau Annual Report.
Such fraud has increased even as claim frequency in the state has dropped, going from a high of 2.2 percent in 2002 to 1.5 percent in 2009, Mr. Hartwig's report said.
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