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motorists (or, the party responsible). Their claims system was changed with
customer service and satisfaction in mind, not the goal of identifying insurance
rate evaders. This is unfortunate, since MVAIC’s previous ability to track the
uninsured could have aided the State in its enforcement efforts.
(f) Loss in New York Automobile Insurance Plan (NYAIP) Customers
A second agency created by the New York State Legislature to address the
problem of uninsured drivers is the New York Automobile Insurance Plan (NYAIP).
Whereas MVAIC was established to provide pedestrians and other specified
parties injured by uninsured vehicles a source of recovery, NYAIP was created to
provide auto liability and physical damages coverage to all of those residents who,
in good faith, were unable to obtain such auto insurance in the voluntary market
in the first place. NYAIP is a processing service for the State’s assigned risk
program and, similar to MVAIC, it is funded by insurance companies.
At the time the DMV study was conducted to identify accidents involving vehicles
with OOS license plates, NYAIP had approximately 500,000 customers.
By
2010, that number had dwindled to 100,000, representing a loss of 400,000, or
4/5 of its customers, in less than 10 years. According to Jack Houston, Special
Investigations Unit Manager at NYAIP, there are only two explanations for this
finding: (1) some of these former NYAIP customers switched over to the voluntary
market, and (2) some found cheaper insurance premiums in other states. The
signs, he says, are obvious: “Look around, and anywhere in the five boroughs you
will find cars with license plates from Pennsylvania, Rhode Island, and North
Carolina.”
Current Initiatives to Combat Insurance Fraud
While insurance rate evasion is extremely difficult not only to track but also to
prove, the little evidence available indicates that the problem has only worsened
over the years. In 2006, the State Commission of Investigation made three key
recommendations:
1. New York State and New York City law enforcement agencies should
investigate aggressively all allegations of rate evasion;
In order to obtain NYAIP coverage, applicants are required to “declare and certify that they have
tried and failed to obtain automobile coverage in New York State within the preceding 60 days and
have been unable to obtain such insurance at rates not exceeding those applicable under the plan”
(New York Automobile Insurance Plan, “Plan Information,” retrieved 16 May 2010 from NYAIP
website, available at: https://www.aipso.com/NY/default.asp?v=1.)
In the early 1990s, NYAIP reported approximately 1.2 million customers. By 2001/2002 ,the
number was reduced to nearly 500,000.