Insurance News - Wednesday, July 11, 2012

Organized Crime Empires Shift From Drugs To Staged Accidents and Bogus Clinics

Mikhail Zemlyansky was nothing if not ambitious. The Russian native masterminded a sprawling crime empire that bled New York auto insurers with seeming impunity.

His gang made at least $400 million in dirty crash-injury claims, federal prosecutors say. That audacious money haul is nearly the team value of the Baltimore Orioles. It was the largest auto-fraud scheme in U.S. history until the gang was broken open this winter.

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Almost One-Third of Ontario Men Polled Have Nodded Off Behind Wheel

The Neglected Driver Survey, an online study of 1,003 Ontario parents with children under the age of 12 who take family road trips, was hosted on the Angus Reid Forum on behalf of InsuranceHunter.ca. The survey reveals: a significant amount of men (30%) have nodded off behind the wheel (compared to 14% of women); almost one-quarter of men (23%) swerved because they were tired (compared to 11% of women); and almost one-third of men (32%) said they worried about getting their family into an accident because they were tired while driving (compared to 24% of women).

According to the survey, many male motorists have driven with heavy eyelids even when they knew their attention to the road was waning:

• 64% of men have continued driving on a road trip when tired
• 24% of men said they have not paid close attention to the road because they were tired
• 17% of men said they hoped they wouldn't get into an accident and kept driving even though they were exhausted
• 10% of men almost got into an accident because they were tired

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Insurers Oppose New York Legislative Changes

The legislature adopted the New York auto insurance legislation S7787/A10784 on the last day of the past session. This was an amendment to the existing law for supplementary uninsured and underinsured (SUM) coverage, and watered down the choices available to the consumer. The current regulations say that policyholders must now opt out of their increased coverage for SUM, instead of the previous opt in process that was more transparent to consumers.

The impact of this legislation could drive premiums sharply upward, and many drivers may end up forking over more money than necessary for coverage that they didn’t specifically select to be a part of their New York auto insurance policy. This most recent legislation also involves a provision that is related to the no fault system, but that isn’t a part of an effort against fraudulent use of the system. The New York Insurance Association fears that the bill’s negative impact could be worsened by the fact that there was no meaningful reform passed by the legislature to the no fault system.

A similar issue was debated in Ontario in 2010 with the introduction of the most recent reforms. At the time standard coverages for medical and rehabilitation expenses, attendant care and caregiver and housekeeping expenses were being reduced. There were parties suggesting to the government that consumers should be renewed with their existing coverages and offered the option of buying down to the new standard coverages. The government chose to require that consumers have their coverages lower at renewal with the option of buying back up.

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