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New York PIP Insurance Update: Is New York’s No-Fault Crisis Solved?

New York PIP Insurance Update: Is New York’s No-Fault Crisis Solved?. Insurance Information Institute June 2, 2005. Robert P. Hartwig, Ph.D., CPCU, Senior Vice President & Chief Economist Insurance Information Institute  110 William Street  New York, NY 10038

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New York PIP Insurance Update: Is New York’s No-Fault Crisis Solved?

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  1. New York PIPInsurance Update:Is New York’s No-Fault Crisis Solved? Insurance Information Institute June 2, 2005 Robert P. Hartwig, Ph.D., CPCU, Senior Vice President & Chief Economist Insurance Information Institute 110 William Street New York, NY 10038 Tel: (212) 346-5520 Fax: (212) 732-1916 bobh@iii.org  www.iii.org

  2. NY PIP UPDATEIs New York’s No-Fault System Truly Under Control?

  3. NY PIP Claim Frequency & Severity, (2000:04 – 2004:04) NY PIP: An incredible success story! Severity down 32% since 2002:03; Frequency down 21% since 2000:04 Sources: Insurance Information Institute based on ISO Fast Track data.

  4. PIP Average Claim Severity: New York State vs. US* NY PIP claim severity is now lower than the US average *ISO Fast Track PIP data as of 2004:Q4 include the following states: FL, HI, KY, KS, MA, MI, MN, NY, ND, SC and UT. Source: Insurance Information Institute calculations based on ISO Fast Track Data.

  5. PIP Pure Premium:New York State vs. US* Change Since 2000:4 NY: -44% US: +23% *ISO Fast Track PIP data as of 2004:Q4 include the following states: FL, HI, KY, KS, MA, MI, MN, NY, ND, SC and UT. Source: Insurance Information Institute calculations based on ISO Fast Track Data.

  6. PIP Pure Premium:New York State vs. US* NY PIP frequency remains above the US average, but is down 21% since 2000:Q4 *ISO Fast Track PIP data as of 2004:Q4 include the following states: FL, HI, KY, KS, MA, MI, MN, NY, ND, SC and UT. Source: Insurance Information Institute calculations based on ISO Fast Track Data.

  7. New York Insurance Fraud Reports, 1995 - 2004 No-fault fraud reports fell 17% in 2004 Number of No-Fault related fraud reports remains high but is beginning to fall Source: New York Department of Insurance, Insurance Frauds Bureau Annual Report; Insurance Info. Institute.

  8. No-Fault Related Arrests by NY Insurance Fraud Bureau *Data through August 2003. No-fault unit was merged with auto unit, separate no-fault arrest data no longer available. Source: New York Department of Insurance, Insurance Frauds Bureau Annual Report; Insurance Info. Institute.

  9. Population of New York’s Auto Insurance Plan* The population of New York’s pool for high-risk drivers dropped by 36.4% from year-end 2002 through year-end 2004. The trend continues in 2005. *Plan policies in force as of December 31 of each year. Source: New York Auto Insurance Plan, AIPSO; Insurance Information Institute.

  10. A SCARY TRIP DOWN MEMORY LANE(Nightmare in Brooklyn)

  11. Growth in Total PIPClaims Costs* Four Quarters Ending 2000:4th PIP Claims Costs PIP Costs in New York grew faster than in any other no-fault state—by far . *Change in “pure premium” Source: Insurance Information Institute from ISO Fast Track Data

  12. PIP Fraud and Abuse in New York State

  13. Change in PIP Loss Costs:New York vs. US:1987-2000* By 2000, growth in New York PIP loss costs were more than twice (121%) the national average. *Through 4 quarters ending 2000:3rd. Source: American Insurance Association/ISO FastTrack; Insurance Information Institute

  14. PIP Claim Severity 1995-2000: New York vs. United States Average PIP Claim New York Other No-Fault States* Source: Fast Track Monitoring System, Fourth Quarter 2000 Report * Excluding Michigan

  15. Impact on Cost of Auto Insurance in New York State

  16. Projected Average Auto Insurance Expenditure in NY State Assuming No Meaningful Reform(Jan. 2002 Est.) Source: Insurance Information Institute

  17. Projected Average Cost of No-Fault Auto Insurance Fraud in NY State Assuming No Meaningful Reform (Jan. 2002 Est.) Cost per Vehicle Source: Insurance Information Institute

  18. What’s Left to be Done? • NYIA: The Battle on Insurance Fraud is Far From Over • Decertify Fraudulent Providers • Still no way to decertify health care providers who commit no-fault fraud • Increase Penalties for Runners • Repeal Presbyterian Hospital Case • Law should acknowledge that cases of suspected may require more time to investigate; Need exception to 30-day rule. • Enact “File & Serve” Legislation • Require filing of summons before serving summons. Allows large numbers of suits to be filed • Restore Flex Rating • Helps insurers deal with loss cost fluctuations, including those due to fraud and abuse Source: New York Insurance Association

  19. Insurance Information Institute On-Line WWW.III.ORG If you would like a copy of this presentation, please give me your business card with e-mail address

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