In New York State, car insurance premiums have been steadily rising, and one of the reasons behind this is organized “fake car accident” fraud. The citizen advocacy group, Citizens for Affordable Rates (CAR), issued a recent warning on the 8th, pointing out that such fraudulent activities are causing ordinary drivers to bear an additional burden of about $300 in premiums each year. They are urging Governor Hochul to take immediate action to close regulatory loopholes.
According to CAR spokesperson José Bayona, fake car accidents have evolved into an organized “black industry” involving drivers, illegal medical clinics, and groups of lawyers. “These criminal groups are exploiting hard-working New Yorkers, leading to continuous increases in insurance premiums. We hope to raise awareness through warnings and urge the government to intervene.”
Common fraudulent practices by criminal gangs include:
– “Swoop and Squat” scams: intentionally slamming on brakes or creating accidents through “sandwiching” maneuvers.
– Inflating medical costs: colluding with unlawful clinics to inflate treatment bills, with single claims reaching up to $50,000.
– False litigation extortion: lawyers filing false lawsuits to pressure insurance companies to settle.
– Recruiting vulnerable groups: low-income individuals being used as pawns, with these “extras” often receiving minimal compensation (from hundreds to thousands of dollars), while the criminal groups make huge profits.
According to data from the New York State Department of Financial Services (DFS), fake accidents and inflated medical bills account for seventy percent of all insurance fraud cases in the state, causing each driver to pay an average of $300 more per year. The average annual insurance premium in New York State is $4,031, nearly forty percent higher than the national average. Currently, about 5.2 million residents are living in “high premium burden areas,” and 11% of drivers opt to drive without insurance due to the affordability issue.
The existing “No-Fault Law” stipulates that insurance companies must pay medical claims within 30 days, allowing fraudsters to cash out before investigations are completed. CAR believes this is a loophole that enables criminals to succeed, leading to passive increases in premiums.
CAR is calling on the Governor to take the following measures immediately:
– Extend the investigation period for suspicious claims.
– Punish involved medical clinics and lawyers severely.
– Crack down on criminal organizations and confiscate illegal gains.
– Establish a dedicated anti-fraud prosecution unit.
Bayona emphasized, “The Governor only needs to sign an executive order to end this crisis. New York families are paying the price for this, and the government must act promptly to restore fairness and trust in the insurance market.”
Citizens for Affordable Rates is comprised of citizens, advocates, and community organizations dedicated to addressing the root causes of the soaring car insurance rates in New York. Through advocacy, education, and policy reforms, they are striving to promote a fair, affordable, and reliable insurance system.