Enacts provisions to reduce the incidence of motor vehicle insurance fraud; repealer

Section 2: Amends Insurance Law section 405(a) to authorize the Insurance Frauds Bureau to accept reports of suspected fraudulent insurance transactions from any self insurer with regard to health insurance coverage, motor vehicle liability coverage, or workers compensation coverage.

Section 3: Amends Insurance Law section 2133 to expand the scope of prohibition for any insurance company, insurance agent, broker, or other person who knowingly possesses, transfers or uses a forged insurance identification card to also include other false insurance documents which purports to evince insurance coverage when it is not in effect or is at limits less than those stated on the document.

Section 4: Amends Penal Law section 170.10 to add a new (6) to the list of documents that the forgery of is considered to be forgery in the Second Degree. The new document that, if forged, would be forgery in the Second Degree are certificates of insurance or an insurance identifica-

Section 12: Amends Vehicle & Traffic law section 502 (1) added by section 11 of this act.

Section 13: Effective Date.

Justification

The purpose of this bill is to address the ever increasing incidence of auto insurance fraud in this state. More particularly, this bill seeks to address insurance fraud that is perpetrated against those law abiding operators of motor vehicles that accurately and truthfully disclose where they reside and operate and garage their vehicles, regardless of where they live. Some who live in high auto insurance rate areas, such as the New York City metropolitan area, misrepresent where they live, garage and operate their automobiles and fraudulently maintain that they live in low insurance premium rate areas that are either upstate or out of state.

There is a prevalence of in-state residents misrepresenting their true place of residence so that they can obtain much lower auto insurance rates. Instead of disclosing their true address in high insurance premium places such as, for example, Bronx or Kings Counties, they state that they live in lower insurance premium rated territories such as North Carolina, Pennsylvania, or upstate counties that have much lower incidents of motor vehicle theft, car accidents or judgments relegated to motor vehicle accidents. This issue was a topic of a report released in 2006 by the State Commission on Investigations. Since 2006, the commission has sunsetted, however, senator Klein is revising end updating this report. The new Report "Auto Insurance Rate Evasion" was released in February 2011. This bill implements many of the suggested changes contained in that Report.

This situation or rate evasion, while artificially lowering the insured auto rates of those who fraudulently do not disclose their true residential address, substantially increases the insurance premiums paid by those who truthfully disclose their actual place of residence and where they operated and garaged their cars. This bill should bring more equity to those who purchase auto insurance coverages in this state and ensure that everyone pays their fair share for auto insurance coverages that matches their actuarial risk of potential physical damage or theft of their automobiles, risk of personal injury or liability exposure due to judgments obtain in local courts.

Legislative history

This bill passed the Senate in 2013-2014 S. 2373, 2011-2012 - S. 4847 Passed Senate in 2011, and reported to Sen. Calendar in 2012 Similar to S.988 of 2011 - Similar to S.7091 of 2010 - Referred to Insurance

Fiscal implications

None