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New York State Insurance Superintendent Gregory V. Serio today announced a major reform package for the State’s automobile no-fault insurance arbitration program. The initiative is designed to expedite settlement of insurance disputes, reduce abuses to the system by health providers and attorneys, and compel more efficient and effective management of claims by insurance carriers. The plan is expected to dramatically reduce the inventory of cases that currently resides in the automobile arbitration system, and will prevent such backlogs from recurring in the future.

"These new procedures will expedite the no fault arbitration process and ensure timely turnaround of all requests. Additionally, it will curb the abuses perpetrated against the system by those who have chosen to use it as a vehicle for their own personal gain," said Superintendent Serio.

The Insurance Department has been investigating the arbitration process for much of this year with the objective of determining the causes of the explosive growth in claims filed with the system. The Department found that much of the delay is attributable to inefficiencies built in to the existing mechanism for resolving disputes and a deluge of claims being brought by health care providers.

"Somewhere along the way, this system turned into a bill collection agency for health care providers instead of a program for helping people injured in automobile accidents," added Serio. We intend to restore the process to its original purpose--that of expediting insurance recoveries for New Yorkers."

The initiative contains the following additional reforms:

  • Consolidating cases arising out of same event and cases with the same litigants will increase efficiency and resolve multiple disputes simultaneously as well as place an increased emphasis on exposing patterns of fraud and abuse;
  • Reviewing all arbitration requests thoroughly when received to ensure completeness and accuracy will improve processing speed and efficiency;
  • Requiring earlier submission of all forms and supporting evidence will result in quicker dispute resolution;
  • Imposing costs of arbitration on applicants when an arbitration request is frivolous will deter abuse of the arbitration system and reduce caseloads;
  • Conducting expedited hearings for injured claimants and health care providers that submit bills within 90 days of denial or nonpayment will rapidly resolve disputes for injured and out of work claimants and conscientious physicians; and
  • Direct fraud referrals by arbitrators, requiring new health care provider assignment forms, and producing original assignment forms at hearings will fight fraud and decrease the cost of automobile insurance for all New Yorkers.

To quickly reduce the present caseload and ensure proper case management in the future, the number of no-fault arbitrators has been increased by 75% since last May. Furthermore, insurers will be required to hire additional staff to meet the needs of the arbitration system and all insurers will be mandated to develop action plans to address their entire pending inventory of arbitration cases in a prompt and efficient matter.

"In May of this year, the Department proposed the most comprehensive overhaul of auto insurance in New York State in almost 30 years to combat fraud and reduce auto insurance premiums," said Serio. "The new procedures of the no-fault arbitration system will complement the proposed fraud-fighting package and help ensure the continued affordability, accessibility, and overall stability of the auto insurance market for the consumers of New York State."

Department of Financial Services


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