Thanks to an epidemic of fraud, auto-insurance prices are soaring statewide. Prosecutors, regulators and insurance investigators say they know how to stop this fraud—but they need the help of Albany legislators in the form of tougher laws. And Albany isn't moving. A number of proposals to fight the swindlers and restrain the cost of policies are emerging, but the most important reforms are in danger of getting sidetracked by politics, at a steep cost to New York's car owners. It's time to send a message to Albany lawmakers that real change is needed. At the heart of the problem is the way scam artists are exploiting no-fault insurance. New York law requires a driver's insurance company to pay the first $50,000 in medical bills from injuries in an accident, no matter who is at fault. Scam artists are having a field day with this. They stage accidents, then send "victims" to phony medical clinics that bill for procedures that are never done. Accidents that at first seem to be no more than simple fender benders produce tens of thousands of dollars in medical fees. Experts say the resulting fraud is probably responsible for a tidal wave of personal-injury claims—especially in the five boroughs of New York City. Nationally, personal-injury costs have risen 33 percent in five years—but in the Empire State costs rose by nearly double that rate. When they have to pay out more in claims, insurers must raise premiums (or abandon the New York market altogether). Rates have been climbing for several years now, and will soar this year. Drivers in high-risk pools will see highest jumps in premiums (see chart), up to 30 percent in parts of the city, but even drivers with unblemished records could see their premiums jump 5 percent to 7 percent. Bottom line: New York's rates will be the highest in the nation. Brooklyn and Queens, where fraud is worst, are seeing huge hikes. In Brooklyn, the personal-injury portion of the hisk-risk premium is jumping 45 percent; in Queens, 35.4 percent. Yet measures to curtail this explosion are going nowhere in Albany. Most important, say investigators and prosecutors, would be a requirement that claimants simply inform their insurance company within 45 days of an accident that they have begun medical treatments and intend to seek reimbursement for the care. Present law lets those making a claim wait 180 days, and many scam artists use the law to dump months of bills all at once on an insurer. Since the company must pay up within 30 days, that gives it little time to sort through and investigate a mountain of bills received all at once. "If an insurance company can make a credible case that a claim is suspicious, then it should be allowed to withhold payments so an investigation can be undertaken," argues Jay Shapiro, head of the rackets division of the Brooklyn District Attorney's office and a veteran of auto-insurance cases. Last year, the state's trial lawyers killed an attempt by the Insurance Department to make these essential changes in the no-fault law. Why? Because trial lawyers want accident victims to have as much time as possible to build up huge medical bills without much scrutiny, in case they eventually want to sue. Reformers now want to legislate the appropriate changes, but the state Assembly is unlikely to pass any such reform. The Assembly rarely goes against the wishes of the state's trial lawyers, who are among the Democratic majority's biggest financial supporters. Other crucial proposals are also a tough sell in the state capitol. Brooklyn rackets chief Shapiro, for instance, is urging stiffer penalties for insurance fraud, especially for the "runners" who recruit people into these scams. Penalties are now so light that prosecutors hesitate to dedicate resources to investigations because those they catch often get off with just a slap on the wrist. Assemblyman Ivan Lafayette (D-Queens) has introduced a bill to bolster penalties, including making it a felony to act as a runner. The measure has passed the state Senate, but it's stuck in the Assembly. "Basically, the Assembly doesn't like laws that increase criminal penalties, so this is a tough sell," says one insurance-industry lobbyist. Albany is ignoring other important reforms because they are unpopular with powerful constituents. Take the problem of unrestricted billing: Insurers must now pay every medical bill, no matter how questionable, even when victims run up thousands of dollars in treatments for acupuncture or massage therapy, for instance, or for unnecessary tests. Other states have stopped this unrestricted medical billing jackpot. New Jersey, for instance, passed a comprehensive auto-insurance reform bill in 1998 that places limits on treatments covered in accident cases. But in New York, trial lawyers and doctors both oppose such limits. And few Albany politicians are ready to stand up to two such powerful groups, even if doing so would save the state's drivers millions in premium dollars. Lawmakers will do something—Albany is pondering some useful but minor anti-fraud measures. One allots more money to investigations; another establishing a special state prosecutor for insurance fraud. The danger is that the politicians will ignore the essential reforms, pass only for these minor proposals, then declare victory—in other words, walk away without enacting real, effective new change. Then, when insurance rates continue rising, they'll will tell drivers, as they have before, that everything is more expensive in New York. In fact, our auto-insurance rates don't have to be the highest in the nation. It is possible to fix the current mess. It just takes a bit of courage in Albany.