The New York Auto Insurance Plan (NYAIP, also known as “the Plan") is reminding insurance producers to take precautions when transacting business with Plan insureds by phone or email.
The Plan's Special Investigations Unit (SIU) became aware of instances where producers took NYAIP applications, endorsement requests, and credit card transactions by phone. Some of them did not verify the applicant's or card holder's identity. They then falsely certified that they met the NYAIP identity verification requirement. The result was:
- Issues regarding applicant information.
- Disputed, unauthorized and questionable credit card transactions.
The Plan reminds producers that when conducting business virtually, they must visually verify their insureds' identities. They must also do this when the sole operator is not the insured. Finally, they must witness the credit card holder's signature. How they do that virtually (Zoom, Microsoft Teams, Facetime, Google Meets, other) is up to them
SIU has also learned of fraudsters taking advantage of some producers. The producers took NYAIP applications, endorsement requests, and credit card transactions by phone or email. However, they did not verify the applicant's or credit card holder's identity. There were multiple instances of fraud. Insureds disputed credit card charges after getting their assignments and ID cards.
Since the producers failed to obtain or witness applicants' signatures authorizing payment, appeals to the banks were unsuccessful. Carriers absorbed significant unpaid earned premiums. Also, many different insureds gave the same third-party credit card numbers to producers by phone and email. They also gave false garaging locations for their vehicles. The false locations were in upstate territories with lower rates. The applicants' licenses showed addresses in the five boroughs. The false locations allowed them to evade the higher rates that applied in the true locations.
All NYAIP certified producers should take steps to verify insureds' identities and confirm the accuracy of rating information insureds provide.