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Superintendent of Insurance Howard Mills today announced that the New York State Insurance Department has approved an average 5.6 percent decrease in auto insurance premiums for drivers in New York’s Automobile Insurance Plan (AIP), also known as the assigned risk plan.

The new AIP rate schedule, which goes into effect on Jan. 15, 2006 for new business, and March 1, 2006 for renewal business, represents a cumulative dollar savings of approximately $28 million for AIP’s policyholders.

"The Insurance Department secured a record number of auto rate reductions for New Yorkers in 2005, saving drivers statewide more than $400 million," Superintendent Mills said. "But our successful efforts to combat fraud have reached the point where they have now translated into rate reductions for drivers who have trouble securing coverage in the voluntary market."

The New York AIP consists of policyholders who are unable to obtain insurance in the voluntary market, generally because they have poor driving records, little or no prior driving experience, or a high frequency of claims. Premiums charged in the New York AIP are determined according to a unified set of rates approved by the Insurance Department, no matter which auto insurer actually issues the policy.

Considering that enrollment in the AIP statewide stood at 196,620 as of Oct. 31, 2005, as compared to well over a million in the early 1990s, hundreds of thousands are today securing auto insurance through voluntary carriers when compared to a decade ago, thereby demonstrating the competitiveness of New York’s marketplace.

The 5.6 percent average rate reduction in 2006 for New York’s AIP policyholders, who usually pay higher premiums than those in the voluntary market because they are deemed a greater risk, comes at the end of a year in which the average New York driver realized auto insurance rate reductions of anywhere from 3 to 10 percent.

The Insurance Department attributes this year’s unprecedented auto rate reductions to increased efforts at combating fraud, which led to a record number of arrests resulting from investigations launched by the Department’s Frauds Bureau, the willingness of more district attorneys to prosecute no-fault auto insurance fraud cases and, importantly, a series of innovative regulatory reforms.

In keeping with Governor Pataki’s directive to tighten oversight of the state’s no-fault auto insurance law, the Insurance Department took two key steps to close loopholes in Regulation 68, which governs the no-fault claims process and had been exploited for fraud and abuse. One reduced the time in which medical providers must submit claims to insurers for payment and the other limited the timeframe for policyholders to report an injury claim.

In addition, the Insurance Department in late 2004 changed Regulation 83, which governs the amounts payable for health procedures covered under the state’s no-fault law. This initiative linked durable medical equipment (e.g., neck braces, walkers) reimbursement costs to the fees for this equipment as listed in the state’s Medicaid provider manual and has enabled insurers to settle claims in a more timely and definitive way.

Department of Financial Services


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