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With Brooklyn’s Assigned Risk Plan Auto Insurance Premiums Soaring by 30% After May 1st, BP Markowitz Calls on Brooklynites to Report Fraud, Asks Albany to Act Quickly on New Laws

In letter to Silver and Bruno, Borough President urges fast action on legislation

Brooklyn Borough President Marty Markowitz today called it "completely unacceptable" that Brooklyn drivers insured through the New York Auto Plan ("assigned risk pool") will, starting tomorrow, face an extraordinary 30% premium hike next time they renew their policy. Tens of thousands of Brooklyn drivers are in the Auto Plan.

In a letter to Assembly Speaker Sheldon Silver and Majority Leader Joseph Bruno sent today, the Borough President called on the leaders to lay aside their differences and quickly enact new laws to bring financial relief to Brooklyn's beleaguered drivers. Recognizing that skyrocketing no-fault insurance fraud is behind much of the recent run-up in auto insurance premiums – and that Brooklyn has become a hotbed of insurance fraud – among these measures are tough provisions designed to slash fraud. However, noting that fraud is only one of the factors behind Brooklyn's sky-high premiums, the Borough President also called for a package of rate-making reforms and for the appointment of an independent insurance consumer advocate.

Markowitz stated: "Brooklyn drivers already pay the highest premiums in the State – probably in the entire nation. Starting tomorrow, an assigned risk plan driver with a good driving record who renews their policy will pay a prohibitive $3,924 a year just for the minimum coverage required by law. If you’ve got a late model car and you want comprehensive coverage, the cost will be an incredible $ 7,195. And it’s even higher for drivers under 35."

"If this problem is not attacked head-on, an increasing number of Brooklyn drivers will simply not buy insurance. And that would place everyone in the borough at risk. And more Brooklyn drivers would illegally license and insure their cars out-of-state," Makowitz cautioned.

According to the New York State Insurance Department, fraud may account for as much as one-quarter of all `accident'-related medical claims. Borough President Markowitz described some of the schemes: "The scams boggle the imagination -- staged accidents with paid passengers all complaining of the same injury at the same clinic, people insuring an old heap in another state and purposely barreling into a late-model luxury car so the corrupt owner of that car can file inflated claims, sometimes with more than one insurance company, `medical mills’ where which doctors act as fronts for non-physicians who bill for tests and treatments for fault injuries at higher physician rates using the doctor’s name."

"It's the duty of all Brooklynites to report any suspected fraud to the Insurance Department," the Borough President asserted. To make it easier for the public to detect and report fraud, Markowitz issued a flyer, Fight Back: How to Identify and Report Auto Insurance Fraud.

Among the anti-fraud measures Borough President Markowitz urged the Legislature to enact are:

a new 30-day deadline for medical providers to notify an insurer of an initial treatment, and a reduction from 180 days to 60 days in the deadline for submitting medical bills;

a new crime category for "runners" – people employed by "medical mills" to recruit potential claimants by scouring the streets and accident scenes;

a discount for insureds who agree to file medical claims with a managed care plan they choose or with one approved by the Insurance Department;

revocation of medical provider authorization to bill under no-fault where the provider is found guilty of fraudulent action or medical misconduct;

more resources for local prosecutors to combat fraud;

require the State Health and Education Departments to take action against corrupt licensees;

require physicians to notify the Department of Health of business relationships with no-fault medical clinics;

allow for a managed care discount on no-fault coverage.

Markowitz also asked the State to take faster and more certain action against State licenses for doctors, chiropractors, and other professionals who have been found to have engaged in fraud. And he said that the Insurance Department must step up its own fraud-fighting efforts.

The Borough President cautioned, however, that widespread fraud was only one of the factors behind Brooklyn’s extraordinary premiums: "We need to re-engineer the entire process so that the needs of consumers – in particular those who pay higher rates simply because of where they live – are met." He also called for new laws to:

appoint and fund an Office of the Insurance Consumer Advocate to advance the interests of consumers, in particular in the ratemaking process;

assist consumers by requiring the Insurance Department to publish and post on its web site competing rates (rates fluctuate wildly and simply shopping around can save the typical driver hundreds of dollars a year);

require an independent audit of insurer compliance with the State's excess profits law over the last five years and develop a new formula for future calculations of excess profits;

require insurers to file underwriting criteria with the Insurance Department.

These provisions are among the measures included in legislation introduced by Assembly Member Alexander B. Grannis, who chairs the Committee on Insurance. In his letter to Silver and Bruno, Borough President Markowitz said that Grannis's bill, A. 8654-D, should serve as a basis for negotiations.

"Whatever form the final legislation takes, it should once and for all deal effectively with no-fault fraud and provide for a consumer advocate. Despite the Insurance Department's best intentions, a consumer advocate is necessary to insure that consumer interests are represented in rate-making and enforcement," Markowitz said.

"I also would like to see a new Brooklyn insurance pool created that would be comprised of drivers who have verifiably excellent driving records. Excellent drivers should not suffer simply because they happen to live in Kings County," he added. "In the long-run, we need to create the conditions so that competition will flourish in the Brooklyn auto insurance market."

The Borough President concluded: "Many Brooklyn residents have cars because they live in areas that are not convenient to mass transit, or they need their cars for their work, or they frequently need to drive out of the city. They simply will not be able to afford the premiums now being demanded. Action is needed now."