New York, March 31, 2010 -- According to the newest statistics from the New York State Insurance Department (NYSID), 2009 showed a 24% increase in criminal convictions related to auto insurance fraud. This higher conviction rate is also based on a lesser number of total arrests: 738 in 2009 compared to 755 and 2008. Insurance Superintendent for the state of New York, James J. Wrynn, stated yesterday, “Insurance fraud is on the upswing and fighting this crime is among the Insurance Department’s highest priorities. The Department is committed to working closely with local authorities to investigate and prosecute these cases. Insurance fraud is serious because it unnecessarily drives up the cost of insurance for honest New Yorkers.”

The 2009 annual report from the NYSID also made note of significant increases in almost every area under its watch including:

• The number of suspected fraud reports and rose 8% up to 24,920;
• 1707 new cases for the year marks a 25% increase;
• A 16% increase in workers' compensation fraud arrests, up to 184;
• 110 arrests made from the NYSID General Unit, up 69%;

And New York certainly isn't the only state reporting such surprising increases in all types of auto insurance fraud. The National Insurance Crime Bureau reports widespread spikes in car insurance fraud cases around the country due to the nearly crumbled economy. Insurance agents, consumers, mechanics, auto body shop personnel, doctors, physical therapists and many other types of people have been busy trying to figure out how to scam money out of major insurance corporations. Whenever economic conditions are downturned, there tends to be a general increase in crime rates of all types, auto insurance fraud cases included.

But it's not just the economy, at least not according to the New York Alliance Against Insurance Fraud. The Alliance blames the state's policy for no-fault of auto insurance. They report that there was a 9% increase in reports that were suspected of fraud during 2008. In comparison, in 2009, the number of suspected car insurance fraud reports rose another 54%.

Ellen Melchionni, president of NYAAIF, stated, “No-fault fraud is often committed by organized criminal enterprises operating corrupt medical clinics that submit fraudulent claims for treatment that was either not performed or not necessary. Unfortunately, it’s innocent New Yorkers who are footing the bill for this fraud through higher auto insurance premiums.”

As quoted by the NYAAIF, the annual report stated, “No-fault fraud often is perpetrated by highly organized criminal entities that can include corrupt medical clinics and corrupt attorneys, acting with state accident/solicitation rings to submit fraudulent no-fault and bodily injury claims. Combating no-fault fraud remains an important part of mitigating the increase in auto insurance costs.”

Figures show that the average cost of a no-fault claim in the state of New York was $8690 in 2009. That is a 55% increase of the $5615 average cost of 2005. This past February, multiple insurance trade groups got together and testified at public hearings in New York City. They requested that the state's no-fault car insurance system be reformed. They also requested significant premium increases to be implemented in order to negate profit losses incurred because of increased fraudulent activities. Once again showing that major insurance corporations and the government will not except losses of profit, honest American car insurance policyholders will continue to experience hefty rate increases.