New York PIP Insurance Update: Is New York’s No-Fault Crisis Solved?
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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?. 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 - PowerPoint PPT Presentation
Transcript of New York PIP Insurance Update: Is New York’s No-Fault Crisis Solved?
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 EconomistInsurance Information Institute 110 William Street New York, NY 10038
Tel: (212) 346-5520 Fax: (212) 732-1916 [email protected] www.iii.org
NY PIP UPDATE
Is New York’s No-Fault System Truly Under
Control?
NY PIP Claim Frequency & Severity, (2000:04 – 2004:04)
$8,2
71
$8,3
60
$8,0
76
$7,7
12
$7,8
83 $8,0
97 $8,3
08 $8,5
97
$8,4
89
$8,0
33
$7,6
00
$6,8
11
$6,2
29
$6,0
01
$5,8
67
$6,5
10
$7,1
88$5,000
$5,500
$6,000
$6,500
$7,000
$7,500
$8,000
$8,500
$9,0000
:04
1:0
1
1:0
2
1:0
3
1:0
4
2:0
1
2:0
2
2:0
3
2:0
4
3:0
1
3:0
2
3:0
3
3:0
4
4:0
1
4:0
2
4:0
3
4:0
4
Avg
. Cla
im C
ost
1.5%
1.6%
1.7%
1.8%
1.9%
2.0%
2.1%
2.2%
2.3%
Claim
Frequency
Avg. Claim Severity
Frequency
Sources: Insurance Information Institute based on ISO Fast Track data.
NY PIP: An incredible success story!
Severity down 32% since 2002:03;
Frequency down 21% since 2000:04
$5
,78
2
$5
,99
0
$6
,00
9
$6
,13
2
$6
,29
9
$6
,37
7
$6
,52
6
$6
,50
9
$6
,54
8
$6
,59
9
$6
,70
5
$8
,27
1
$8
,36
0
$8
,07
6
$7
,71
2
$7
,88
3
$8
,09
7
$8
,30
8
$8
,59
7
$8
,48
9
$8
,03
3
$7
,60
0
$7
,18
8
$6
,811
$7
,06
0
$6
,97
1
$6
,83
8
$6
,72
9
$5
,92
9 $6
,59
3
$5
,86
7
$6
,00
1
$6
,22
9
$6
,51
0
5,000
5,500
6,000
6,500
7,000
7,500
8,000
8,500
9,000
00
:4
01
:1
01
:2
01
:3
01
:4
02
:1
02
:2
02
:3
02
:4
03
:1
03
:2
03
:3
03
:4
04
:1
04
:2
04
:3
04
:4
US excl. NY NY
PIP Average Claim Severity: New York State vs. US*
*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.
NY PIP claim severity is now lower than the US average
$9
2.8
7
$9
6.3
8
$9
9.3
9
$1
01
.34
$1
03
.06
$1
04
.69
$1
07
.06
$1
09
.30
$11
0.5
5
$11
2.5
7
$11
2.4
6
$1
87
.32
$1
88
.70
$1
77
.38
$1
70
.15
$1
71
.18
$1
72
.74
$1
75
.70
$1
80
.67
$1
76
.68
$1
68
.46
$1
61
.04
$1
52
.78
$1
44
.94
$11
4.4
1
$11
4.9
9
$11
3.9
1
$11
3.6
1
$9
5.3
9
$11
1.8
1
$1
04
.89
$11
1.4
6
$1
21
.47
$1
34
.53
0
20
40
60
80
100
120
140
160
180
200
00
:4
01
:1
01
:2
01
:3
01
:4
02
:1
02
:2
02
:3
02
:4
03
:1
03
:2
03
:3
03
:4
04
:1
04
:2
04
:3
04
:4
US excl. NY NY
PIP Pure Premium:New York State vs. US*
*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.
Change Since 2000:4NY: -44%US: +23%
1.6
7
1.6
7
1.7
1.6
8
1.6
7
1.6
7
1.6
8
1.7
1
1.7
1
1.7
2
1.6
8
2.2
6
2.2
6
2.2
2.1
7
2.1
7
2.1
3
2.1
1
2.1
2.0
8
2.1 2.1
2
2.1
3
2.1
3
1.6
1
1.6
4
1.6
5
1.6
8
1.6
7
1.7
1
1.7
9
1.8
61.9
52.0
7
1.0
1.5
2.0
2.5
00
:4
01
:1
01
:2
01
:3
01
:4
02
:1
02
:2
02
:3
02
:4
03
:1
03
:2
03
:3
03
:4
04
:1
04
:2
04
:3
04
:4
US excl. NY NY
PIP Pure Premium:New York State vs. US*
*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.
NY PIP frequency remains above the US average, but is down 21% since 2000:Q4
New York Insurance Fraud Reports, 1995 - 2004
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Auto CollisionDamage
Auto Theft
No-Fault Auto
Source: New York Department of Insurance, Insurance Frauds Bureau Annual Report; Insurance Info. Institute.
Number of No-Fault related fraud reports remains high but is
beginning to fall
No-fault fraud reports fell
17% in 2004
No-Fault Related Arrests by NY Insurance Fraud Bureau
50
107
182
88
0
20
40
60
80
100
120
140
160
180
200
2000 2001 2002 2003**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.
Population of New York’s Auto Insurance Plan*
414,146
487,937
368,834310,153
0
100,000
200,000
300,000
400,000
500,000
600,000
2001 2002 2003 2004
*Plan policies in force as of December 31 of each year.Source: New York Auto Insurance Plan, AIPSO; Insurance Information Institute.
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.
A SCARY TRIP DOWN MEMORY
LANE(Nightmare in
Brooklyn)
-20%
-10%
0%
10%
20%
30%
Growth in Total PIPClaims Costs*
*Change in “pure premium”Source: Insurance Information Institute from ISO Fast Track Data
PIP Claims Costs
PIP Costs in New York grew faster than in any other no-fault state—by
far .
Four Quarters Ending 2000:4th
PIP Fraud and Abuse in New York State
0%
50%
100%
150%
200%
250%
300%
U.S. New York
*Through 4 quarters ending 2000:3rd.Source: American Insurance Association/ISO FastTrack; Insurance Information Institute
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.
$4,862 $4,969
$5,675$6,064
$6,700
$8,335
$3,976$4,183 $4,352
$4,699$4,963
$4,523
1995 1996 1997 1998 1999 2000
New York
Other No-Fault States*
* Excluding Michigan
Average PIP Claim
PIP Claim Severity 1995-2000:New York vs. United States
Source: Fast Track Monitoring System, Fourth Quarter 2000 Report
Impact on Cost of Auto Insurance in New York State
Projected Average Auto Insurance Expenditure in NY State Assuming No Meaningful Reform
(Jan. 2002 Est.)
$957
$1,096
$1,210
$1,317
$1,439
$1,578
$900
$1,000
$1,100
$1,200
$1,300
$1,400
$1,500
$1,600
2000 2001 2002 2003 2004 2005
Source: Insurance Information Institute
Projected Average Cost of No-Fault Auto Insurance Fraud in NY State Assuming No Meaningful Reform (Jan. 2002 Est.)
9
46
$81
$124
$177
$242
$321
$0
$100
$200
$300
$400
1999 2000 2001 2002 2003 2004 2005
Source: Insurance Information Institute
Cost per Vehicle
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” LegislationRequire 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
Insurance Information Institute On-Line
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