Illegal premium discounts are being given by insurance companies in New York for online driver safety courses that are not approved by the Department of Motor Vehicles, according to letters written by the Empire Safety Council " a provider of defensive driving courses " to the New York Insurance Department, the New York Attorney Generals Office, and the Department of Motor Vehicles.

William Bonds, president of the Empire Safety Council, has issued two letters of complaint: one against the National Safety Council, FirstNet Learning, and Costco for National Safety Councils online course offered by FirstNet Learning, and the other against The Hartford Insurance Company and AARP Hartford Insurance Plans for an online course offered by AARP.

Bonds notes in his letters that, currently, any driver safety course taken over the Internet is not eligible for insurance premium reductions in New York State. On the New York DMV website, under the heading, How to Reduce Your Points and Your Insurance Premiums, an outline of the benefits of taking a DMV-approved accident prevention course is accompanied by a note stating, You cannot receive the point or insurance benefits for an Internet course.

In both letters, Bonds alleges that the subjects of his complaints are intentionally deceiving both consumers and insurance companies by creating the illusion that these courses are acceptable for discounts. While he concedes that the courses are not directly advertised as approved for insurance benefits, he contends that the deception is achieved through misdirection by customer service representatives, and, in the case of the National Safety Council course, the issuing of certificates that appear similar to Nationals classroom course, which is approved by the DMV.

Discussions With Customer Service Reps

Backing up these assertions, Bonds outlined verbal and electronic correspondence that he had with representatives from some of the companies listed in the complaints.

In the letter against the National Safety Council, FirstNet Learning, and Costco, Bonds states that he had an email sent to FirstNet Learning regarding Nationals online course, which inquired, Are online courses honored in New York? Someone told me they were not. Thanks.

The email generated a response, the letter continues, from a FirstNet Learning customer support representative, who replied, Actually, the only company we are aware of that denies the use of online DDC training in N.Y. is GEICO. A copy of that email was sent by Bonds to Insurance Advocate.

Bonds writes that he later spoke with the customer support representative who sent the email, and that she informed him that hundreds and hundreds of New York drivers take and complete Nationals Internet DDC course each week for the insurance discount.

Bonds continues that he then spoke with FirstNet Learning CEO Roy Burger. Bonds letter states, In my discussion with Mr. Burger, I asked him, Isnt it true that most, if not all, of the New York drivers who take and complete Nationals Internet course are doing so for insurance premium reduction? His response was an unequivocal yes. I again explained to Mr. Burger that the Department of Motor Vehicles has not yet approved any Internet courses for insurance reduction and that any insurance carrier who gave a discount for an unapproved course is in violation of New Yorks Insurance Laws. Thereafter, Mr. Burger explained to me that, in his opinion, it is up to the insurance carrier [to deny the discount].

Calls by Insurance Advocate to Roy Burger were not returned.

In the letter against The Hartford and AARP, Bonds cites conversations that he had with customer service representatives at AARP, noting that without equivocation, each representative told me that completion of their new online driver safety course is accepted by The Hartford and other New York State insurance companies for the insurance reduction discount.

The letter adds, Additionally, Mr. Tony Gigliello, AARP course coordinator, has told me, Any New York senior citizen who is a member of AARP Hartford Insurance Plans who completes the AARP online course is getting the insurance discount and will receive the discount in the future.

Bonds also notes, AARP has even published articles in [the] local Yankee Trader in this state that largely target New York senior citizens to take their unapproved online driver safety course.

Department Acknowledges Complaint

Andy Mais, spokesman for the Insurance Department, confirmed that the Empire Safety Council letters had been received, and said that the department is looking into the matter. He would not confirm Bonds assertions that insurance companies in the state are giving the premium discounts for unapproved courses. What we have now is an allegation, Mais said.

He added that the department did send a circular letter to insurance companies in 2003, which was updated in 2005, listing courses that are approved in the state.

While he confirmed that no online courses have yet been approved by the DMV for discounts (the DMV is currently studying the effectiveness of such courses), he noted that New Yorkers are free to take the online courses for other reasons. While allegations of intentional deception are under investigation, Mais noted that the AARP ad, for example, does not say specifically that completion of the course makes a driver eligible for an insurance discount in New York.

Squeeze Play

Bonds acknowledged as much in a telephone interview with Insurance Advocate. But he said that while the official line is that consumers should check with their carriers, these consumers are caught in a squeeze play. He explained that consumers asking, for example, if the National Safety Council course is approved, will receive an answer of yes. He added that the certificate of completion that they receive will be similar to the approved certificate, and, citing his exchanges with the FirstNet Learning and AARP representatives, that customer support is backing up consumers expectation of a discount. The similar certificates, said Bonds, are also deceiving to insurance companies that issue the discounts. Insurance companies are being fooled by this, Bonds asserted.

In his letter regarding the National Safety Council, FirstNet Learning, and Costco, Bonds was direct in his accusations. The three companies, he said, are engaged in insurance fraud on a very wide scale. I do not believe for a moment that these people are making all this money and do not know what is going on and are not aware of the laws concerning these courses. These people are not stupid. They are knowingly perpetrating this fraud upon New Yorks drivers by confusing both drivers and insurance companies by misdirection, and fooling people and companies into accepting certificates similar to their approved classroom course.

National Safety Council Denies Allegations

The National Safety Council strongly rejected Bonds accusations. National prepared a written response to the Insurance Department, Attorney Generals Office, and the DMV, and that letter was shared with Insurance Advocate. The letter, written by John H. Kennedy, executive director of Nationals defensive driving courses, addresses three specific areas.

Firstly, the letter states, The National Safety Council does not promote its DDC online program in the State of New York for insurance discount or point reduction benefits. As our websiteclearly states: drivers should check with your insurance carrier to see if you qualify. The [DMV]-approved National Safety Council Defensive Driving Courses-6 (DDC-6-NY) classroom program is the only program that we promote in New York for the insurance and point reduction benefits offered to New York drivers. The letter adds that the National website lists approved training centers, and that Costco and FirstNet Learning are not listed. While we continue to support the development of the pilot program for the online delivery of this beneficial program, we realize the need for stringent and comprehensive rules and policies to govern this delivery method, the letter asserts.

It also addresses Nationals relationship with FirstNet Learning, and maintains that National should not be held responsible for what customer service representatives from FirstNet Learning say. FirstNet Learning, a reseller of the National Safety Councils defensive driving course-onlinedoes not represent or act as an agent of the National Safety Council, nor is the relationship a partnership, joint venture, or any other type of business arrangement, Kennedy writes. He adds that National also has no relationship with Costco, a FirstNet Learning customer. Kennedy continues, The National Safety Council does not host the FirstNet Learning and Costco online programs on our leaning management system " we simply provide the online course content. In addition, we do not provide, nor are we responsible for, customer support, interaction, or marketing services for FirstNet Learning customers.

Finally, the letter addresses the certificates that National issues for course completion. The [Empire Safety Council] letter states the National Safety Councils DDC-6 classroom and DDC-online Certificates of Completion are intentionally similar. This is just not the case, Kennedy writes. He explains the differences between the two certificates, noting that the Certificate of Completion for the New York Point/Insurance Reduction Program is used only in conjunction with our classroom program in New York (Click Associated Images at end of article to view certificates in question).

The Hartford, AARP Respond

As for the allegations against AARP and The Hartford, Nancy Thompson, spokesperson for AARP, said that the online program has never been promoted as offering insurance discounts. We certainly wont give out misinformation, Thompson said.

In response to the conversation between Bonds and AARPs Gigliello, Thompson said that Bonds had asked specific questions, and AARP responded with information that it believed to be correct as a courtesy to the caller, but that AARP does not intentionally try to draw people in with the promise of a discount.

She added that she did not know how many other people may have called AARP seeking information about insurance discounts for the online course, or how many people would call seeking that information.

Thompson said AARPs understanding from The Hartford was that the discount for the online course was applicable, and she explained that AARPs expertise is in the content of the program, not in the insurance matters.

Responding to inquiries via e-mail, Joe Loparco, media relations director at The Hartford, stated, According to The Hartfords guidelines, in states that require driver safety courses to be approved, we make discounts available only if such programs have been approved.

He added that there was some miscommunication with AARP with respect to the online course. Loparco noted, We understand that a miscommunication recently occurred with respect to the new AARP Driver Safety Online Course in New York.Since this was brought to our attention, we promptly clarified communications with our AARP partners and are taking steps to comply with any and all state requirements.

Word is Out

It should be noted that while representatives at both PIANY and IIABNY had recently heard about the online courses being accepted by companies, neither could point to a specific incidence of this occurrence. Much of the information out there is being spread by word of mouth, with many details repeating allegations made in the Empire Safety Council letters.

Ellen Kiehl, assistant executive director for government affairs at PIANY, said that she had heard about it and had seen some correspondence.

Jamie Deapo, IIABNY member advocate, said that he has heard discussions or rumors from other agents who have heard from clients that companies are accepting such discounts, but that no one has mentioned any particular company. One agent, he said, brought up a specific question regarding the National Safety Council course, citing some confusion regarding the differences between the online course and the classroom course. Another, he added, had mentioned that he heard GEICO was the only company not accepting online driver safety courses, which is similar to the FirstNet Learning email response cited in Bonds letter.

Deapo added that it is possible that discounts have been given in error, but that he does not believe that companies are intentionally giving discounts for unapproved driver safety courses.

Stuart Fries, chairperson of the rules subcommittee at the New York Automobile Insurance Plan (NYAIP), said that he was aware that there is some confusion regarding the usage of online driver safety courses for premium discounts, and that the matter had been discussed during a NYAIP rules subcommittee meeting. Fries said that he had seen the Empire Safety Council letter, though he himself did not know of a specific incidence in which a driver had received a discount for an unapproved online course.

However, he said that the rules subcommittee is recommending that the NYAIP governing committee send a letter to insurance companies that write through the plan clarifying that online courses are not approved for premium discounts in New York. The letter, Fries said, would help to ensure that companies are not giving the discount unknowingly. He added that it is unknown whether the governing committee will definitely act on the subcommittees recommendation.

Fries explained that it is his understanding that a law has been signed by Governor George E. Pataki that would allow online courses to be accepted for premium discount in New York, but that those courses have to be approved by the DMV. To date, the DMV has not approved any course offered over the Internet.