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 Superintendent of Insurance Gregory V. Serio today announced that the Department’s year-end fraud fighting statistics show that arrests reached an all time high, increasing by 10% from 2000 and 381% since 1994.

"These results speak for themselves - increases in arrests during 2001 and a 381% increase since 1994 are evidence that under Governor Pataki's leadership the Department is effectively combating fraud. In combination with the Department’s aggressive work against fraud, we are protecting New York’s consumers from the results of insurance fraud--higher rates," said Serio.

"The Frauds Bureau has grown into one of the premier agencies in the country dedicated to the investigation of insurance fraud," added Serio. "On this, the 20th year of service to the people of New York State, the Department is proud to release the Annual Frauds Report which highlights the important strides that have been made since its inception."

Highlights from the 2001 Annual Frauds Report include:

  • The Frauds Bureau, with a total of 554 arrests, set a new record in 2001, topping last year’s total of 503 by 10%.
  • In response to the attack on the World Trade Center, the Bureau instituted a dedicated hotline and fax line for reporting potential fraud, established a procedure for fast-tracking WTC-related fraud claims, and staffed an emergency center 12 hours a day, 7 days a week.
  • The Bureau expanded its outreach program and now conducts training for the NYPD and other local police academies aimed at police officers, who are often the first to respond to auto accidents.
  • The first statewide sweep ever conducted in New York led to the arrest of more than 40 suspects in May for workers’ compensation and no-fault fraud, as well as various other types of insurance fraud. In December, the Department along with the Queens District Attorney’s Office charged 112 persons—among them doctors, lawyers and medical clinic personnel—for their participation in a scheme to swindle auto insurers by submitting nearly $1 million in fraudulent bills.
  • In accordance with Governor Pataki’s Executive Order naming the Attorney General as Special Prosecutor to coordinate efforts to combat auto insurance fraud, the Bureau and the AG’s no-fault team developed a strategy for partnership and cooperation in the investigation and prosecution of auto fraud cases.

The report also outlines the Department’s fraud fighting plans for 2002, which include a strong focus on no-fault insurance fraud issues by partnering with a number of insurance companies to address no-fault insurance fraud issues on the underwriting level and collaboration of efforts with district attorneys, other State agencies, and law enforcement officials on the federal, state and local levels to better marshal resources in our efforts to eliminate no-fault insurance fraud.

"Insurance crooks beware – New York State will not tolerate criminals making money by defrauding the insurance industry and our year end statistics make it clear, if you commit insurance fraud in New York State, we will find and arrest you," said Serio. "Our investigators have combined forces with other law enforcement agencies and these stepped-up collaborative efforts are working, with more arrests in 2001 than in the Bureau’s history—but we need the legislature to do their part to support our efforts."

"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. "In December, we introduced new no-fault arbitration procedures to streamline and shorten the process, as well as detect fraud. The new procedures 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."

"We can continue to make record numbers of arrests, but without the inception of new crimes we can assure that the Department’s efforts and those of our law enforcement colleagues will continue to be frustrated by an inability to have arrests lead to consequential convictions," added Serio. "The legislature must make 2002 the year they make the meaningful changes necessary to protect New York’s policyholders from the $1 billion a year fraud tax."

In 1996, Governor George E. Pataki championed a program bill that increased penalties for workers’ compensation fraud and required special fraud investigation units to be set up by all insurers. That same year, the crime of Aggravated Insurance Fraud was made a felony if a person has been convicted within the preceding five years of any fraudulent insurance act. In 1998, a Governor’s program bill amended the insurance law requiring HMOs to create special fraud investigation units, and the Children's Health Insurance Plan bill was passed adding a new section to the Insurance Law making it a crime to submit written or other physical evidence in support of a claim that is fraudulent. In 1998, the Department issued a directive requiring all insurers in the state to file a fraud prevention plan. In 2001, the Frauds Bureau approved plans for 416 insurers.

A copy of the Insurance Frauds Bureau’s report is available on the Department’s Web site or by calling 1-800-342-3736 to request a copy.

Department of Financial Services


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