New York State
Insurance Department

DEPARTMENT RELEASES ANNUAL FRAUDS REPORT
Report Shows that Fraud Arrests Have Tripled Since 1994

New York, January 21, 1999

Superintendent of Insurance Neil D. Levin today announced that the Department's Annual Frauds Report shows that insurance fraud arrests are up 34% from 1997. In addition, since the beginning of Governor Pataki's administration the number of insurance fraud arrests has more than tripled.

"These numbers are proof that we are winning the fight against insurance fraud," said Levin. "Governor Pataki's leadership in the Legislature has given us the tools we need to effectively combat fraud. The results speak for themselves: insurance fraud arrests are at an all time high and the number of suspected insurance fraud cases has actually begun to decline. This means that we are getting our message out to the public and succeeding in deterring insurance fraud from occurring in the first place."

During 1998, a new regulation strengthened the partnership between the Department and insurance companies to make fraud fighting efforts more efficient and effective. The second amendment to Regulation 95 requires all insurers in the state that write a minimum number of specified policies to file a fraud prevention plan with the Department and establish a Special Investigation Unit (SIU). The SIU is the insurance company's internal mechanism for investigating fraud so that fraud can be detected quickly and referred to the Insurance Department promptly for further action.

Other 1998 accomplishments include:

• A record 371 arrests for insurance fraud. This is a 34% increase over 1997 and a 223% increase since 1994.
  
• Undercover sting operations were an unqualified success leading to the arrests of 100 people for selling and possessing fraudulent auto insurance identification cards. These targeted efforts are aimed at getting uninsured vehicles off the roads.
  
• The number of suspected insurance fraud cases the Department received in 1998 dropped to 21,070 from a peak of 23,113 in 1997.
  
• A pilot electronic fraud reporting system was launched allowing insurance companies to file fraud reports on-line. This allows for ease in tracking cases and reviewing prior fraud case submissions. The Department plans to expand this program in 1999.

The report outlines the Department's fraud fighting plans for the upcoming year, such as expanding undercover operations. The Department will also be pushing for legislation to increase criminal and civil penalties for those committing insurance fraud.

A copy of the Insurance Frauds Bureau's report is available on the Department's website CLICK HERE or by calling toll free 1-800-342-3736 to request publications.