This bill has been amended

Bill S4847-2011

Enacts provisions to reduce the incidence of motor vehicle insurance fraud

Grants the superintendent of financial services authority to investigate fraudulent activities, such as motor vehicle operators who drive with no insurance coverage, and those who misrepresent their principal place of residence or where their motor vehicle is principally garaged and operated; authorizes such superintendent to accept reports of suspected fraudulent insurance actions; requires insurance companies and self-insurers to report incidents of insurance fraud to the department of financial services; includes within the class D felony of forgery in the second degree, the forgery of a certificate of insurance or an insurance identification card; includes within the class C felony of forgery in the first degree, the forgery of 10 or more written instruments; includes within the class E felony of insurance fraud in the fourth degree, the operation of a motor vehicle in this state when the vehicle is insured in another state, but it is actually garaged in this state or the owner principally resides in this state; requires applicants for motor vehicle registrations and driver's licenses to provide the department of motor vehicles with the address of their principal place of residence.

Details

Actions

  • Jan 4, 2012: REFERRED TO INSURANCE
  • Jan 4, 2012: returned to senate
  • Jan 4, 2012: died in assembly
  • Jun 6, 2011: referred to insurance
  • Jun 6, 2011: DELIVERED TO ASSEMBLY
  • Jun 6, 2011: PASSED SENATE
  • May 11, 2011: ADVANCED TO THIRD READING
  • May 10, 2011: 2ND REPORT CAL.
  • May 9, 2011: 1ST REPORT CAL.554
  • Apr 27, 2011: REFERRED TO INSURANCE

Votes

VOTE: COMMITTEE VOTE: - Insurance - May 9, 2011
Ayes (13): Seward, Flanagan, Golden, Grisanti, Lanza, Larkin, LaValle, Martins, Saland, Young, Espaillat, Kennedy, Smith
Ayes W/R (4): Breslin, Diaz, Kruger, Peralta
Nays (1): Parker

Memo

BILL NUMBER:S4847

TITLE OF BILL:

An act to amend the insurance law, the penal law, and the vehicle and traffic law, in relation to insurance fraud

PURPOSE:

The purpose of this bill is reduce the incidence of auto insurance fraud including fraud committed by those who misrepresent where they live, operate their automobile, and garage such vehicle for insurance coverage purposes. By misrepresenting where such automobile operators truly live and operate their motor vehicle, these persons obtain inappropriate reductions in their auto insurance premium rates and such costs are shifted to other law abiding automobile owners.

SUMMARY OF PROVISIONS:

Section 1: Adds a new Insurance Law section 401(d) to explicitly expand the authority of the superintendent of Insurance, under the Insurance Fraud prevention Article, to investigate fraudulent activities with regard to motor vehicle operators who have not secured automobile insurance coverage or who misrepresent the principle place where such automobiles are garaged and operated.

Section 2: Amends Insurance Law section 405(a) to authorize the Insurance Frauds Bureau to accept reports of suspected fraudulent insurance transactions from any self insurer with regard to health insurance coverage, motor vehicle liability coverage, or workers compensation coverage.

Section 3: Amends Insurance Law section 2133 to expand the scope of prohibition for any insurance company, insurance agent, broker, or other person who knowingly possesses, transfers or uses a forged insurance identification card to also include other false insurance documents which purports to evince insurance coverage when it is not in effect or is at limits less than those stated on the document.

Section 4: Amends Penal Law section 170.10 to add a new (6) to the list of documents that the forgery of is considered to be forgery in the Second Degree. The new document that, if forged, would be forgery in the Second Degree are certificates of insurance or an insurance identification card.

Section 5: Amends Penal Law section 170.15 (Forgery in the First Degree) to include as forgery in the first degree, the fraudulent making, completion, or alteration of 10 or more written instruments such as certificates of insurance or insurance identification cards.

Section 6: Adds a new Penal Law section 175.50 to make it a class E felony to offer a false application for motor vehicle insurance or

registration. Under this provision, anyone who submits to the Department of Motor Vehicles or to an auto insurer (to obtain an auto insurance policy or insurance identification card) any document that contains a false statement or information with regard to where such applicant resides or where such applicant's motor vehicle is garaged or operated and such document is used directly or indirectly to register an automobile shall be a class E felony.

Section 7: Amends Penal Law section 176.05 which defines the term "insurance fraud". Under this bill, the term "insurance fraud" is expanded to include any false document used to secure either insurance coverage, file an insurance policy claim, or obtain payment for personal lines insurance coverages (i.e. auto and homeowners insurance). Under current law, only false documents that are used to secure commercial lines policies or money for claims against a commercial lines policy (i.e general liability or business property policies) are considered to be insurance fraud. This bill expands the types of insurance policies that persons cannot lie about to obtain coverage or claims payment to include personal lines coverages such as motor vehicle liability or homeowners insurance.

Section 8: Amends Penal Law section 176.15 to expand the scope of insurance fraud in the 4th degree to include the operation of a motor vehicle on a public highway when such operator is insured by a policy issued under the laws of another state, but such person in fact principally lives and garages their vehicle in New York.

Section 9: A new Vehicle & Traffic Law section 201-a is added to give law enforcement personnel access to any individual's street address provided to the Department of Motor Vehicles to register a motor vehicle in this state or to obtain a driver's license in this State. This information can be used to ensure that those who submit information to the Department submit accurate information of their residence and where they operate and garage their motor vehicle for auto insurance premium rating purposes.

Section 10: Amends Vehicle & Traffic Law section 401(1) to require that all those who file an application to register an automobile in New York must provide their street address where they reside if such person uses a Post Office box for their location of residence. The purpose of this provision is to curtail those that submit fraudulent information on where such applicants truly reside.

Section 11: Amends Vehicle & Traffic Law section 502(1) to require that all those who file an application for a driver's license must provide their street address where they reside if such person uses a Post Office box for their location of residence.

JUSTIFICATION:

The purpose of this bill is to address the ever increasing incidence of auto insurance fraud in this state. More particularly, this bill seeks to address insurance fraud that is perpetrated against those law abiding operators of motor vehicles that accurately and truthfully disclose where they reside and operate and garage their vehicles, regardless of where they live. Some who live in high auto insurance rate areas, such as the New York City metropolitan area,

misrepresent where they live, garage and operate their automobiles and fraudulently maintain that they live in low insurance premium rate areas that are either up-state or out of state.

There is a prevalence of in-state residents misrepresenting their true place of residence so that they can obtain much lower auto insurance rates. Instead of disclosing their true address in high insurance premium places such as, for example, Bronx or Kings Counties, they state that they live in lower insurance premium rated territories such as North Carolina, Pennsylvania, or upstate counties that have much lower incidents of motor vehicle theft, car accidents and judgments relegated to motor vehicle accidents. This issue was a topic of a report released in 2006 by the State Commission on Investigations. since 2006, the commission has sunsetted, however, senator Klein is revising end updating this report. The new Report "Auto Insurance Rate Evasion" was released in February 2011. This bill implements many of the suggested changes contained in that Report.

This situation or rate evasion, while artificially lowering the insurance rates of those who fraudulently do not disclose their true residential address, substantially increases the insurance premiums paid by those who truthfully disclose their actual place of residence and where they operated and garaged their cars. This hill should bring more equity to those who purchase auto insurance coverages in this state and ensure that everyone pays their fair share for auto insurance coverages that matches their actuarial risk of potential physical damage or theft of their automobiles, risk of personal injury or liability exposure due to judgments obtain in local courts.

LEGISLATIVE HISTORY: Similar to S.988 of 2011 Similar to S.7091 of 2010 - Referred to Insurance

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: The same date as the merger of the Insurance and Banking Departments.


Text

STATE OF NEW YORK ________________________________________________________________________ 4847 2011-2012 Regular Sessions IN SENATE April 27, 2011 ___________
Introduced by Sen. KLEIN -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance AN ACT to amend the insurance law, the penal law, and the vehicle and traffic law, in relation to insurance fraud THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Section 401 of the insurance law is amended by adding a new subsection (d) to read as follows: (D) THE SUPERINTENDENT SHALL HAVE BROAD AUTHORITY PURSUANT TO THIS CHAPTER TO INVESTIGATE FRAUDULENT ACTIVITIES WITH REGARD TO MOTOR VEHI- CLE DRIVERS THAT OPERATE AUTOMOBILES WITH NO INSURANCE COVERAGE, AND MOTOR VEHICLE INSUREDS WHO MISREPRESENT THE PRINCIPAL PLACE WHERE INSURED MOTOR VEHICLES ARE GARAGED AND OPERATED. OPERATING MOTOR VEHI- CLES WITHOUT PROPER INSURANCE IN VIOLATION OF ARTICLE SIX OF THE VEHICLE AND TRAFFIC LAW IS A SIGNIFICANT DANGER TO THE PUBLIC BECAUSE DRIVERS ARE UNABLE TO COMPENSATE INDIVIDUALS FOR PERSONAL INJURIES, DEATH AND PROPERTY DAMAGE THEY INFLICT UPON OTHERS. FURTHERMORE, MOTOR VEHICLE INSUREDS WHO MISREPRESENT THE PRINCIPAL PLACE WHERE SUCH VEHICLES ARE GARAGED AND OPERATED IMPROPERLY SHIFT THEIR HIGH LIABILITY EXPOSURE COSTS TO OTHER MOTOR VEHICLE INSUREDS THAT DO NOT FACE SUCH HIGH LIABIL- ITY RISK AND INSURANCE PREMIUM COSTS. S 2. Subsection (a) of section 405 of the insurance law, as amended by section 7 of part A of chapter 62 of the laws of 2011, is amended to read as follows: (a) Any person licensed or registered pursuant to the provisions of this chapter, and any person engaged in the business of insurance or life settlement in this state who is exempted from compliance with the licensing requirements of this chapter, including the state insurance fund of this state, who has reason to believe that an insurance trans- action or life settlement act may be fraudulent, or has knowledge that a fraudulent insurance transaction or fraudulent life settlement act is
about to take place, or has taken place shall, within thirty days after determination by such person that the transaction appears to be fraudu- lent, send to the superintendent on a form prescribed by the superinten- dent, the information requested by the form and such additional informa- tion relative to the factual circumstances of the transaction and the parties involved as the superintendent may require. The superintendent shall accept reports of suspected fraudulent insurance transactions or fraudulent life settlement acts from any self insurer, including but not limited to self insurers providing health insurance coverage or those defined in section fifty of the workers' compensation law, and shall treat such reports as any other received pursuant to this section. THE SUPERINTENDENT SHALL ACCEPT REPORTS OF SUSPECTED FRAUDULENT INSURANCE TRANSACTIONS FROM ANY SELF INSURER INCLUDING, BUT NOT LIMITED TO, SELF INSURERS PROVIDING HEALTH INSURANCE COVERAGE, THOSE PROVIDING MOTOR VEHICLE LIABILITY INSURANCE OR THOSE DEFINED IN SECTION FIFTY OF THE WORKERS' COMPENSATION LAW, AND SHALL TREAT SUCH REPORTS AS ANY OTHER RECEIVED PURSUANT TO THIS SECTION. S 3. Section 2133 of the insurance law, as amended by chapter 77 of the laws of 1994, is amended to read as follows: S 2133. [Forged] FALSE INSURANCE DOCUMENTS AND FORGED insurance iden- tification cards. Any insurance company, insurance agent, insurance broker or other person who or which, personally or by the action of an employee or agent, KNOWINGLY possesses, transfers or uses: (A) ANY DOCU- MENT WHICH PURPORTS TO EVINCE INSURANCE COVERAGE WHEN SUCH COVERAGE IS NOT IN EFFECT OR IS IN EFFECT AT LIMITS LESS THAN THOSE STATED IN THE DOCUMENT; OR (B) a forged insurance identification card for a motor vehicle, having knowledge, personally or through such employee or agent, of the fact that such insurance identification card, when issued, did not actually represent an owner's policy of liability insurance or a financial security bond issued by an insurance company licensed to do business in this state covering the motor vehicle identified on such card, shall be liable for payment to the people of this state of a civil penalty in a sum not exceeding one thousand dollars for the first such violation and a sum not exceeding five thousand dollars for each subse- quent violation. For the purposes of this section the term "forged insurance identification card" means a written insurance identification card which has been falsely made, completed or altered, and the term "falsely made, completed or altered" shall have the same meaning as set forth in section 170.00 of the penal law. S 4. Subdivision 5 of section 170.10 of the penal law is amended and a new subdivision 6 is added to read as follows: 5. A prescription of a duly licensed physician or other person author- ized to issue the same for any drug or any instrument or device used in the taking or administering of drugs for which a prescription is required by law[.]; OR 6. A CERTIFICATE OF INSURANCE OR AN INSURANCE IDENTIFICATION CARD, AS DEFINED IN SECTION THREE HUNDRED ELEVEN OF THE VEHICLE AND TRAFFIC LAW. S 5. Section 170.15 of the penal law is amended to read as follows: S 170.15 Forgery in the first degree. A person is guilty of forgery in the first degree when, with intent to defraud, deceive or injure another, he OR SHE falsely makes, completes or alters [a]: 1. TEN OR MORE WRITTEN INSTRUMENTS; OR 2. A written instrument which is or purports to be, or which is calcu- lated to become or to represent if completed:
[1.] (A) Part of an issue of money, stamps, securities or other valu- able instruments issued by a government or governmental instrumentality; or [2.] (B) Part of an issue of stock, bonds or other instruments repres- enting interests in or claims against a corporate or other organization or its property. Forgery in the first degree is a class C felony. S 6. The penal law is amended by adding a new section 175.50 to read as follows: S 175.50 OFFERING A FALSE APPLICATION FOR MOTOR VEHICLE INSURANCE OR REGISTRATION. A PERSON IS GUILTY OF OFFERING A FALSE APPLICATION FOR MOTOR VEHICLE INSURANCE OR REGISTRATION WHEN KNOWING THAT ANY DOCUMENT HE OR SHE FILES WITH THE DEPARTMENT OF MOTOR VEHICLES OR AN INSURER PROVIDING LIABILITY INSURANCE FOR A MOTOR VEHICLE CONTAINS A FALSE STATEMENT OR FALSE INFOR- MATION WITH REGARD TO WHERE HE OR SHE RESIDES OR WHERE HIS OR HER MOTOR VEHICLE IS GARAGED AND OPERATED. OFFERING A FALSE APPLICATION FOR MOTOR VEHICLE INSURANCE OR REGISTRA- TION IS A CLASS E FELONY. S 7. Subdivision 1 of section 176.05 of the penal law, as amended by chapter 635 of the laws of 1996 and as designated by chapter 2 of the laws of 1998, is amended to read as follows: 1. A fraudulent insurance act is committed by any person who, knowing- ly and with intent to defraud presents, causes to be presented, or prepares with knowledge or belief that it will be presented to or by an insurer, self insurer, or purported insurer, or purported self insurer, or any agent thereof, any written statement as part of, or in support of, an application for the issuance of, or the rating of a commercial insurance policy, or certificate or evidence of self insurance for commercial OR PERSONAL insurance or commercial OR PERSONAL self insur- ance, or a claim for payment or other benefit pursuant to an insurance policy or self insurance program for commercial or personal insurance which he knows to: (i) contain materially false information concerning any fact material thereto; or (ii) conceal, for the purpose of mislead- ing, information concerning any fact material thereto. S 8. Section 176.15 of the penal law, as amended by chapter 515 of the laws of 1986, is amended to read as follows: S 176.15 Insurance fraud in the fourth degree. A person is guilty of insurance fraud in the fourth degree when he [commits] OR SHE: 1. COMMITS a fraudulent insurance act and thereby wrongfully takes, obtains or withholds, or attempts to wrongfully take, obtain or withhold property with a value in excess of one thousand dollars; OR 2. OPERATES A MOTOR VEHICLE ON A PUBLIC HIGHWAY, WHEN SUCH MOTOR VEHI- CLE IS INSURED BY A POLICY ISSUED UNDER THE LAWS OF ANOTHER STATE, WHEN SUCH PERSON MAINTAINS HIS OR HER PRINCIPAL RESIDENCE IN THIS STATE OR SUCH MOTOR VEHICLE IS PRINCIPALLY GARAGED IN THIS STATE, AND SUCH INSUR- ANCE POLICY WAS ISSUED UPON ANY WRITTEN OR ORAL STATEMENT BY SUCH PERSON THAT HE OR SHE PRINCIPALLY RESIDES IN SUCH OTHER STATE OR THAT SUCH MOTOR VEHICLE IS PRINCIPALLY GARAGED IN SUCH OTHER STATE. Insurance fraud in the fourth degree is a class E felony. S 9. The vehicle and traffic law is amended by adding a new section 201-a to read as follows: S 201-A. ACCESS TO INFORMATION. THE DEPARTMENT SHALL ALLOW LAW ENFORCEMENT PERSONNEL ACCESS TO ANY INDIVIDUAL'S STREET ADDRESS PROVIDED
PURSUANT TO PARAGRAPH B OF SUBDIVISION ONE OF SECTION FOUR HUNDRED ONE AND SUBDIVISION ONE OF SECTION FIVE HUNDRED TWO OF THIS CHAPTER. S 10. Paragraph b of subdivision 1 of section 401 of the vehicle and traffic law, as amended by chapter 222 of the laws of 1996, is amended to read as follows: b. Every owner of a motor vehicle which shall be operated or driven upon the public highways of this state shall, except as otherwise expressly provided, cause to be presented, by mail or otherwise, to the office or a branch office of the commissioner, or to any agent of the commissioner, constituted as provided in this chapter, an application for registration addressed to the commissioner, and on a blank to be prepared under the direction of and furnished by the commissioner for that purpose, containing: (a) a brief description of the motor vehicle to be registered, including the name and factory number of such vehicle, and such other facts as the commissioner shall require; (b) the weight of the vehicle upon which the registration fee is based if the fee is based on weight; (c) the name and residence, including county of the owner of such motor vehicle, PROVIDED THAT IF THE APPLICANT USES A POST OFFICE BOX WHEN PROVIDING A RESIDENCE ADDRESS, SUCH APPLICANT SHALL ALSO PROVIDE THE STREET ADDRESS AT WHICH HE OR SHE RESIDES; (d) provided that, if such motor vehicle is used or to be used as an omnibus, the applicant also shall so certify, and in the case of an omnibus also certify as to the seating capacity, and if the omnibus is to be operated wholly within a municipality pursuant to a franchise other than a fran- chise express or implied in articles of incorporation upon certain streets designated in such franchise, those facts shall also be certi- fied, and a certified copy of such franchise furnished to the commis- sioner; (e) provided, that, if such motor vehicle is an altered livery, the applicant shall so furnish a certified copy of the length of the center panel of such vehicle, provided, however, that the commissioner shall require such proof, as he OR SHE may determine is necessary, in the application for registration and provided further, if the center panel of such vehicle exceeds one hundred inches, the commissioner shall require proof that such vehicle is in compliance with all applicable federal and state motor vehicle safety standards; and (f) such addi- tional facts or evidence as the commissioner may require in connection with the application for registration. Every owner of a trailer shall also make application for the registration thereof in the manner herein provided for an application to register a motor vehicle, but shall contain a statement showing the manufacturer's number or other identifi- cation satisfactory to the commissioner and no number plate for a trail- er issued under the provisions of subdivision three of section four hundred two of this [chapter] ARTICLE shall be transferred to or used upon any other trailer than the one for which number plate is issued. The commissioner shall require proof, in the application for registra- tion, or otherwise, as such commissioner may determine, that the motor vehicle for which registration is applied for is equipped with lights conforming in all respects to the requirements of this chapter, and no motor vehicle shall be registered unless it shall appear by such proofs that such motor vehicle is equipped with proper lights as aforesaid. The said application shall contain or be accompanied by such evidence of the ownership of the motor vehicle described in the application as may be required by the commissioner or his OR HER agent and which, with respect to new vehicles, shall include, unless otherwise specifically provided by the commissioner, the manufacturer's statement of origin. Applica- tions received by an agent of the commissioner shall be forwarded to the
commissioner as he OR SHE shall direct for filing. No application for registration shall be accepted unless the applicant is at least sixteen years of age AND HAS SIGNED SUCH APPLICATION ATTESTING TO THE TRUTH AND VERACITY OF THE FACTS STATED THEREIN. S 11. Subdivision 1 of section 502 of the vehicle and traffic law, as amended by section 2 of part CC of chapter 58 of the laws of 2011, is amended to read as follows: 1. Application for license. Application for a driver's license shall be made to the commissioner. The fee prescribed by law may be submitted with such application. The applicant shall furnish such proof of identi- ty, age, ADDRESS OF HIS OR HER RESIDENCE and fitness as may be required by the commissioner. WHEN PROVIDING HIS OR HER ADDRESS OF RESIDENCE, THE APPLICANT SHALL PROVIDE THE STREET ADDRESS AT WHICH HE OR SHE RESIDES. EACH APPLICANT SHALL SIGN HIS OR HER APPLICATION ATTESTING TO THE TRUTH AND VERACITY OF THE FACTS STATED THEREIN. The commissioner may also provide that the application procedure shall include the taking of a photo image or images of the applicant in accordance with rules and regulations prescribed by the commissioner. In addition, the commission- er also shall require that the applicant provide his or her social secu- rity number and provide space on the application so that the applicant may register in the New York state organ and tissue donor registry under section forty-three hundred ten of the public health law. In addition, an applicant for a commercial driver's license who will operate a commercial motor vehicle in interstate commerce shall certify that such applicant meets the requirements to operate a commercial motor vehicle, as set forth in public law 99-570, title XII, and title 49 of the code of federal regulations, and all regulations promulgated by the United States secretary of transportation under the hazardous materials trans- portation act. In addition, an applicant for a commercial driver's license shall submit a medical certificate at such intervals as required by the federal motor carrier safety improvement act of 1999 and Part 383.71(h) of title 49 of the code of federal regulations relating to medical certification and in a manner prescribed by the commissioner. For purposes of this section and sections five hundred three and five hundred ten-a of this title, the term "medical certificate" shall mean a form substantially in compliance with the form set forth in Part 391.43(h) of title 49 of the code of federal regulations. Upon a deter- mination that the holder of a commercial driver's license has made any false statement, with respect to the application for such license, the commissioner shall revoke such license. S 12. This act shall take effect on the same date and in the same manner as part A of chapter 62 of the laws of 2011 takes effect, as provided in subdivision (a) of section 114 of such part, provided that sections nine, ten and eleven of this act shall take effect on the same date and in the same manner as section 2 of part CC of chapter 58 of the laws of 2011 takes effect.

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