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CAS Annual Meeting No-Fault: Then and Now

CAS Annual Meeting No-Fault: Then and Now Elizabeth A. Sprinkel November 11, 2003 · New Orleans, Louisiana. Trends in Auto Injury Claims, 2002 Edition. Growth in U.S. PIP Severity and Loss Costs. Annualized changes 1980 - 2000. PIP severity: +6.41% PIP loss costs: +5.92%

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CAS Annual Meeting No-Fault: Then and Now

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  1. CAS Annual Meeting No-Fault: Then and Now Elizabeth A. SprinkelNovember 11, 2003 · New Orleans, Louisiana

  2. Trends in Auto Injury Claims, 2002 Edition

  3. Growth in U.S. PIP Severity and Loss Costs Annualized changes 1980 - 2000 PIP severity: +6.41% PIP loss costs: +5.92% CPI-U, medical care +6.44% PIP loss costs Annualized changes 1995-2000 PIP severity: +6.14% PIP loss costs: +3.95% CPI-U, medical care +3.41% PIP severity IRC, Trends in Auto Injury Claims, 2002 Edition.

  4. Changes in PIP Loss Costs in No-Fault States 1980 - 2000 ($) Monetary threshold (V) Verbal threshold IRC, Trends in Auto Injury Claims, 2002 Edition.

  5. Growth in PIP Average Loss Cost in No-Fault States 1995-2000 Source: Fast Track Monitoring System

  6. PIP Claim Frequency 1995-2000: New York vs. No-Fault States Number of PIP Claims Per 100 Insured Cars New York Other No-Fault States* Source: Fast Track Monitoring System * Excluding Michigan

  7. PIP Claim Severity 1995-2000: New York vs. No-Fault States Average PIP Claim New York Other No-Fault States* Source: Fast Track Monitoring System * Excluding Michigan

  8. Claiming Behavior in New York’s No-Fault Auto Insurance System

  9. 2000 Survey of Closed PIP Claims in New York Sampling Scheme • More than 2,800 PIP claims closed with payment during 4th quarter of 2000 • Twelve participating insurers representing about half of the private passenger no-fault auto insurance market in New York

  10. 2000 Survey of Closed PIP Claims in New York Survey Instrument Detailed information was submitted for each claimant on: • Nature of injuries • Medical treatment • Attorney involvement • Losses and payments • Suspicion of fraud and buildup

  11. Manhattan 3% Brooklyn 9 Queens 8 The Bronx 5 Staten Island 2 Unknown 1 Medium cities 14% Small towns 12 Rural areas 4 Distribution of Claimants by Accident Location NYC Metropolitan Area and Suburbs = 52% IRC, Claiming Behavior in New York’s No-Fault Auto Insurance System, 2001

  12. Key Findings of 2000 Survey of PIP Claims in New York • Deterioration in claiming behavior • Growth in number of injuries reported • Increase in temporary disabilities • Rise in use of certain medical professionals • Rise in use of MRIs and EMGs • Higher average losses and payments

  13. Key Findings of 2000 Survey of PIP Claims in New York • Worsening trends more pronounced in the New York City metro area • Suspicion of fraud and buildup much more prevalent in the New York City metro area

  14. Average # Injuries: 1.87 1.94 2.21 2.64 1.76 1.84 NY PIP Claimants Reporting Three or More Injuries 1997 vs. 2000 IRC, Claiming Behavior in New York’s No-Fault Auto Insurance System, 2001

  15. Increase in Temporary Disability Among Metro NYC PIP Claimants 1997 vs. 2000 IRC, Claiming Behavior in New York’s No-Fault Auto Insurance System, 2001

  16. Use of Chiropractors Among NY PIP Claimants 1997 vs. 2000 IRC, Claiming Behavior in New York’s No-Fault Auto Insurance System, 2001

  17. Use of Physical Therapists 1997 vs. 2000 IRC, Claiming Behavior in New York’s No-Fault Auto Insurance System, 2001

  18. Use of Alternative Treatment Professionals 1997 vs. 2000 IRC, Claiming Behavior in New York’s No-Fault Auto Insurance System, 2001

  19. More Visits to Providers Among NYC PIP Claimants IRC, Claiming Behavior in New York’s No-Fault Auto Insurance System, 2001

  20. Increased Use of MRI in Metro NYC IRC, Claiming Behavior in New York’s No-Fault Auto Insurance System, 2001

  21. More Intensive Use of Diagnostics Among NYC PIP Claimants Percentage of Claimants Receiving Each Procedure 3 or More Times IRC, Claiming Behavior in New York’s No-Fault Auto Insurance System, 2001

  22. Sharp Increase in Average Loss in NYC Metro Area Average Total Loss Per PIP Claimant IRC, Claiming Behavior in New York’s No-Fault Auto Insurance System, 2001

  23. Average Total Payment Per PIP Claimant Average Payment Also Increased in NYC Metro Area IRC, Claiming Behavior in New York’s No-Fault Auto Insurance System, 2001

  24. Average Total Loss and Payment by Degree of Fraud IRC, Claiming Behavior in New York’s No-Fault Auto Insurance System, 2001

  25. Distribution of Claims by Degree of Suspicion of Fraud or Abuse Rating on scale of ‘0’ (no fraud present) to ‘10’ (very high suspicion) IRC, Claiming Behavior in New York’s No-Fault Auto Insurance System, 2001

  26. High Suspicion of Fraud or Abuse Among NY PIP Claimants Percentage of claimants with suspicion ratings between 7 and 10 IRC, Claiming Behavior in New York’s No-Fault Auto Insurance System, 2001

  27. Insurance Fraud: A Public View

  28. Insurance Fraud: • Intentionally deceiving an insurance company or agent for financial gain. • Planned Fraud • Intentional accidents • Property damage or injury claim fraud • Application fraud • Opportunistic Fraud • Claim padding or buildup

  29. Attitudes Toward Insurance Buildup: 1989 Through 2002 IRC, Insurance Fraud: A Public View, 2003

  30. Increase amount of claim to make up for insurance premiums Increase amount of claim to make up for deductible = Significant difference at 95% confidence level. Acceptance of Claim Padding and Buildup – National vs. New York State Sample % Who Agree It is All Right To... IRC, Insurance Fraud: A Public View, 2003

  31. = Significant difference at 95% confidence level. Personal Acceptance of Application Fraud National vs. New York State % Acceptable to ‘You Personally’ Deliberately underestimating number of miles driven Stating vehicle driven for pleasure when really for business purposes Saying car kept in area with lower rates than where actually garaged Listing older driver on vehicle that primarily driven by driver < 21 IRC, Insurance Fraud: A Public View, 2003

  32. = Significant difference at 95% confidence level. Personal Acceptance of Application Fraud National vs. New York State % Acceptable to ‘You Personally’ Deliberately overstating years of driving experience Failing to list certain drivers on application Failing to list prior accidents, tickets, or claims Failing to list teen driver as member of household Preliminary data. IRC, Insurance Fraud: A Public View, 2003

  33. = Significant difference at 95% confidence level. Personal Acceptance of P.D. Claim Fraud National vs. New York State % Acceptable to ‘You Personally’ Adding old damage to new accident claim Describing accident differently to reduce fault Describing stolen car with higher value than had Abandoning car and reporting it stolen Pretending hit and run occurred to submit claim IRC, Insurance Fraud: A Public View, 2003

  34. Staying out of work longer than medically necessary Continuing treatment after injury has healed for higher settlement Submitting medical bills for treatment never received Filing claim for person not involved in accident Being involved in organized ring that files fake claims = Significant difference at 95% confidence level. Personal Acceptance of Injury Claim Fraud National vs. New York State % Acceptable to ‘You Personally’ IRC, Insurance Fraud: A Public View, 2003

  35. Insurance fraud leads to higher rates for everyone People who commit fraud should be prosecuted to the fullest extent of law Insurers are sometimes forced to stop offering coverage due to fraud Insurers should take steps to stop fraud even if it means charging slightly higher premiums to cover costs Perceptions About Insurance Fraud National vs. New York State % Strongly Agree/Agree/Probably Agree IRC, Insurance Fraud: A Public View, 2003

  36. Inaccurate applications are the result of honest mistakes, not deliberate attempts to obtain lower rate When making claim, it is acceptable to change details of accident to ensure payment Insurance fraud doesn’t hurt anyone = Significant difference at 95% confidence level. Perceptions About Insurance Fraud (cont’d) National vs. New York State % Strongly Agree/Agree/Probably Agree IRC, Insurance Fraud: A Public View, 2003

  37. 718 Providence Road · P.O. Box 3025 · Malvern, PA 19355-0725Phone 610.644.2212 · Fax 610.640.5388 www.ircweb.org

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