Many insurance agents likely know all too well the issues that can arise from auto insurance fraud, which creates more work for them and other major issues for people affected by these crimes. This can also serve to increase insurance rates for just about everyone in the state, and as such lawmakers in the state of New York are now working to help reduce instances of this kind of issue cropping up within its borders.
Earlier this week, the New York State Senate passed S1959A, a law which would grant insurance companies the ability to do more to crack down on auto insurance fraud by allowing them to retroactively cancel the policies of anyone who was found to be guilty of auto coverage fraud, according to a report from the office of State Sen. Martin Golden, a lawmaker representing Brooklyn, who also sponsored the bill. The hope is that by allowing this to happen, these criminals will not be able to collect from insurance companies when they commit fraud.
“Auto insurance fraud is costing New Yorkers millions of dollars, and it’s time that fair and honest members of our community stop paying for the crimes of others,” Sen. Golden said. “This legislation will give insurance companies the right to revoke insurance policies for those who try to game the system.”
How does it happen?
In general, when people want to commit auto insurance fraud, they will purchase coverage from a policy issuer using a bad check or stolen credit card, then stage an accident to rack up damages that are later paid to them, so they can pocket the money, the report said. Currently, insurers cannot cancel such a policy even if they determine that there was fraud involved, and pass the added cost on to other consumers in the form of higher rates.
The ability of insurers to retroactively cancel policies is quite common nationwide, the report said. With New York now allowing it, only seven states across the country (Arizona, Colorado, Kansas, Maine, Maryland, North Carolina, and South Dakota) do not grant companies the ability to do so.
Insurance agents will likely see such a move as a boon to their ability to better handle the claims that come across their desks. This may also give them more time and a greater ability to deal with legitimate customers’ problems as soon as they arise.