Staged Construction Site Accidents: Proposed Bill Aims to Mitigate Insurance Fraud in New York
A new proposal for a staged construction site incident bill has been made to reduce the growing tendency of insurance fraud. To prevent a rise in the cost of construction insurance, this law will ensure that severe fines are imposed.
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Bill on Staged Construction Site Accident
On Tuesday, Mar. 5, Assemblyman David Weprin and Neil Breslin, chairman of the Senate committees on Internal Governance, Ethics, and Insurance, stated that staged construction site accidents are becoming more frequently used by individuals and criminal groups to file fraudulent insurance claims.
According to Weprin, the legislation draws inspiration from Alice's Law, an insurance deception scheme that established criminal sanctions for individuals fabricating automobile collisions. In 2003, a staged accident claimed the life of Alice Ross, a 71-year-old woman from Queens. Additionally, Weprin sponsored that plan, enacted into law by incumbent Governor Andrew Cuomo in 2019.
As mentioned, this type of criminal activity must face severe penalties, as householders and home builders will be informed that it will be significantly more expensive for insured individuals. Weprin asserted that the rising insurance prices ultimately translate to higher construction costs, which can have a detrimental influence on the industry if the state continues to aggressively push ahead with the building of new affordable housing projects.
These expensive insurance rates have become a burden for contractors and developers, eventually leading to higher housing costs for all New Yorkers, as these prices are subsequently passed down to consumers. During the first half of 2022, workers' compensation premiums surged an average of 10.1%. These hikes have been higher than the rate of inflation this year. Based on a recent study, insurance costs in New York are 400% greater than the national average for enterprises engaged in construction and contracting.
On the other hand, Brian Sampson, president of the Empire State Chapter of the Associated Builders and Contractors, noted that in the year 2010, a project in the state of New York that was valued at $100 million was anticipated to have approximately four percent of its total cost allocated to workers' compensation, general liability, and excess insurance. In 2020, the percentage more than doubled to almost 8.5%. As of 2024/2023, that percentage has increased to 12.5%. With a project costing one hundred million dollars, they anticipate growing to thirteen or fourteen percent by 2025. Concerning affordable housing and market-rate housing, each project will reportedly lose 40 to 45 to 50 units.
Problems with Fraudulent Insurance Claims
There is a widespread problem known as insurance fraud, which impacts individuals and significantly influences insurance firms and the rates they charge. When insurance companies pass on the expenses of fraudulent claims to their consumers, it can increase policyholders' rates. It is because insurers pass on the costs of fraudulent claims to their customers. Insurance businesses and premiums are significantly impacted when false insurance claims are filed.
Every day, fraudulent activity is committed across the entirety of the construction business. Contractors need to stick to the conditions of their contracts and maintain openness and honesty with their customers to avoid the significant penalties associated with fraudulent activities. There is a possibility that a remark that appears to be benign could instead serve as the foundation for a fraud allegation, which could lead to the loss of millions of dollars, future contracts, and possibly even criminal penalties.
Related Article: 8 Ways to Safeguard Your Construction Project from Fraudulent Activities