The number of questionable insurance claims--those that contain at least one sign of possible fraud--rose 10 percent in the state of New York in 2010 compared to 2008, according to a new report by the National Insurance Crime Bureau (NICB).
Last year, insurance companies in New York referred 7,026 suspicious insurance claims to the bureau for investigation, compared to 6,378 in 2008 and 6,726 in 2009.
Most questionable claims were for personal auto insurance, and 57 percent were from New York City. The rest were scattered throughout the state with the next highest number, 145, in Buffalo.
Fraud indicators for auto insurance claims
A single questionable claim referred for review may contain one to seven indicators of potential fraud. Most claims were referred because insurers suspected customers had faked or exaggerated injuries, received more-than-required medical treatment, or had taken part in staged accidents.
A recent study by the Insurance Research Council (IRC) found elements of fraud in 22 percent of the New York City area's car insurance personal injury protection (PIP) claims, and the appearance of over-billing or excessive use of medical services in another 14 percent of claims.
No-fault auto insurance system may encourage fraud
Under the state's no-fault auto insurance system, PIP covers medical treatment of injuries to the driver and passengers of the policyholder's car, regardless of who caused the accident.
No-fault laws are designed to help people get quick access to treatment, but critics say they have the unintended consequence of encouraging fraud, which drives up car insurance rates for all consumers.
NICB is pushing for passage of a state bill sponsored by Sen. James Seward that supporters say would reform the state's no-fault auto insurance system to prevent abuse.