New York State - Division of Criminal Justice Services

III. Dimensions of Motor Vehicle Insurance Fraud in New York StateNational OverviewDuring the 1960s, traditional motor vehicle liability insurance became the targetof public criticism because of expensive and time-consuming process of determiningwho was at fault and, therefore, legally liable when an accident occurred. In responseto this consumer dissatisfaction with the insurance industry, many states enacted nofaultlegislation that allows accident victims to recover financial losses, such as medicaland hospital expenses and lost income from their own insurance companies withoutliability being assigned. In 1974, New York became one of 12 states that initiated trueno-fault motor vehicle insurance.However, as the law resulted in an increase in an no-fault insurance claims,insurance fraud crimes involving motor vehicles also increased across the UnitedStates. In many states, the financial benefits of having no-fault insurance are beingeliminated due to the higher premiums now paid for coverage. According to theInsurance Information Institute, as of June 2010, only 12 states still have no-faultinsurance laws.On a national level, identifying the crime of motor vehicle insurance fraud in orderto develop trends that allow law enforcement to target the problem is difficult. Unlike themotor vehicle theft, theft from a motor vehicle and theft of motor vehicle parts andaccessories, statistics on motor vehicle insurance fraud crimes are not part of theUniform Crime Report maintained by the Federal Bureau of Investigation. There are nouniform definitions of insurance fraud among the states and insurance fraud is illegal inall states, the level of seriousness attached to the crime also varies by state. Somestates classify insurance fraud or certain types of fraud as a felony, others as amisdemeanor. In addition, the dollar amount involved can determine whether the crimeis considered a felony.According to the Insurance Information Institute, not all states require specialinvestigation units of insurance companies to forward every suspicious claim to theirstate’s fraud bureau. These reports are “suspected incidents” of insurance fraud arehandled in-house by insurance carriers or by civil actions instead of being prosecutedcriminally. Prompted by the incidence of insurance fraud, 46 states have set up fraudbureaus, some bureaus have limited powers, and some states have more than onebureau to address fraud in different lines of insurance.Statewide StatisticsIn 2009, there were 18,368 incidents of suspected motor vehicle insurance fraudreported to the Insurance Frauds Bureau of the State Insurance Department, includingmotor vehicle theft, motor vehicle fire, and larceny from a motor vehicle, motor vehiclevandalism, motor vehicle collision damage, motor vehicle fraud bill, motor vehicleinsurance cards, and motor vehicle miscellaneous and No-Fault.NYS DIVISION OF CRIMINAL JUSTICE SERVICES MVTIFP BOARD / ANNUAL REPORT 2009 Page 9