There is almost no likelihood that a person could be victimized by identity theft in a property/casualty insurance transaction, but a consumer could find it difficult to secure insurance coverage if they have put a security freeze in place without this exemption, AIA said today during a joint hearing conducted by the Senate Committee on Consumer Protection and the Assembly Committee on Consumer Affairs and Protection.
“Identity theft through the use of property/casualty insurance policies would seem very unlikely, given the difficulties of fraudulently obtaining a policy, the checks in the system to prevent fraudulent claims and the limited opportunity for financial gain on the part of the identity thief,” said Gary Henning, AIA assistant vice president, Northeast Region.
Statistics seem to bear this out. According to a Federal Trade Commission (FTC) report for 2005, only .4 percent of all reports of identity theft across the country are insurance-related. For New York state, this percentage translates into approximately 70 insurance-related identity theft complaints in all of 2005. However, the FTC does not breakdown the “insurance” category in the report into the various lines of insurance. Therefore, it seems doubtful that many of these complaints are property-casualty insurance complaints. Additionally, as the complaints are self-reported, some of the complaints may have been miscategorized, artificially inflating the “insurance” category for identity theft reports.
“Applying security freeze provisions to property-casualty insurers is not without its disadvantages to consumers. Consumers will experience unexpected and unwanted delays in obtaining necessary coverage. A consumer attempting to obtain an insurance binder for the purchase of a new automobile may be unable to do so because the insurer can not obtain necessary reports to underwrite the customer due to a security freeze. This consumer may find they are unable to drive the new car off the lot, leading to unnecessary frustration,” added Henning.
About AIA
The American Insurance Association represents approximately 350 major insurance companies that provide all lines of property and casualty insurance and write more than $123 billion annually in premiums. The association is headquartered in Washington, D.C. and has representatives in every state.