Hochul’s Car Insurance Plan Blows Fraud Way Out Of Proportion: Stats

By Austin C. Jefferson and Kevin Duggan
Gov. Hochul's proposal to lower car insurance premiums is built on suspected fraud. But a body of evidence reveals that there really is very little.
There's less than meets the eye.
Gov. Hochul’s Big Tech-backed push to lower auto insurance premiums has rested on her assertion that rampant insurance fraud is driving up rates, but the number of fraud investigations, arrests and convictions is laughably small, a Streetsblog investigation has found
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A big business grift
Hochul is simply repeating insurance industry talking points to distract from her efforts to erode crash victims' rights to sue for damages – which are unlikely to bring down costs anyway, experts have said.
“Whenever anybody looks into it, it’s a phony argument, it never is the kind of fraud they’re talking about, it doesn’t exist,” said Joanne Doroshow, the executive director of Center for Justice and Democracy and co-founder of Americans for Insurance Reform. “They believe that if the public buys into the notion that fraud exists ... it’s easier for them to turn the tide against everyday people who try to file claims.”
Insurance companies make profits by investing the money from premiums until they have to pay it back out in claims, also known as insurance "float." Berkshire Hathaway Chairman Warren Buffett once described float as "money that we hold that doesn’t belong to us."
Hochul has claimed that combatting fraud would cut insurance premiums by $300, citing estimates by the Insurance Information Institute, a trade group for the insurance industry.
The Citizens Budget Commission, which supports Hochul’s proposals, was more conservative in its forecast, saying that New York drivers might save $200 a year, based on recent, but different, insurance reforms in Michigan and Florida. 
However, insurance companies themselves have been hesitant to make any promises. 
According to State Farm, the largest auto insurance provider in the nation by market share, premiums rise and fall based on underlying costs like vehicle repairs, litigation, inflation, fraud and abuse, and the idea premiums will be lowered for the foreseeable future is tough to grasp.
“Whether auto insurance gets more, or less, affordable in the years ahead is impacted by whether the underlying costs of claims go up or down,” the company said in a statement.
Hochul has proposed taking a look at the state’s excess profits regulations, which are supposed to divert insurance revenues back to policyholders. She has released few details about that plan, and it's unlikely to yield savings, since insurance companies currently claim to operate at a loss in New York State, and could simply argue that they don’t have any profits to redistribute, according to Doroshow. 
“They would come back with an argument saying, ‘We’re not making any money here, so policyholders don’t get to get any of our money,’” she said. “The governor will never hold them accountable.”
Hollowing out rights
The governor argues that prices will go down if the state chips away at the rights of crash victims to sue for damages. That includes narrowing the state's definition of "serious injury," which entitles victims to seek damages for pain and suffering beyond the $50,000 covered by no-fault insurance. Currently, the term "serious injury" includes injuries like fractures, permanent loss of an organ or member, loss of a fetus, or a medically determined non-permanent injury that keeps one out of work for more than 90 days.
Hochul wants to disqualify people in that last category, even if the injuries keep victims from going through their day-to-day lives for three months. This would have a dramatic effect on crash victims with traumatic brain injuries or soft tissue injuries because they don't neatly fit the remaining definitions.
Currently, in trials, juries apportion blame for a crash in percentages, and each party receives compensation for pain and suffering that corresponds to their share of responsibility. The governor also wants to change that system so that drivers who are found at least 51 percent responsible for a crash would get no compensation beyond no-fault — even if a jury finds that the other driver or victim, such as a cyclist who jumped a red light, shares a significant portion of blame.
Hochul also proposed limiting pain and suffering damages for drivers who are uninsured at the time of a crash. This applies not only to people who intentionally drive without insurance, but also anyone borrowing a car from someone else and without coverage in place.
Those are all efforts known as tort reform, which aims to reduce people’s rights to sue for damages. Doroshow, who has fought tort reform for decades, including with lawyer and consumer rights activist Ralph Nader, said those measures don’t actually work, especially given how opaque insurance companies are around justifying their rate increases.  
“It’s a fantasy to think that that’s what’s going to bring rates down, particularly in a state like this that has weak regulations,” she said. 
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