New York auto insurance reform promises 10% savings
New York Gov. Kathy Hochul has announced auto insurance reforms as part of the newly approved state budget that she says will bring down rates and tackle fraudulent claims.
A press release from Hochul’s office calls the reform “common-sense steps” that battle fraud, limit damages paid out to bad actors, and ensure that consumers, rather than insurance companies, are prioritized.
New Yorkers’ insurance rates are, on average, more than $4,000 annually, nearly $1,500 above the national average, according to the release.
“This is going to put real money back in people’s pockets,” Hochul said last week. “There’s been a study by the Citizens Budget Commission that says it should reduce costs by about 10%. That means that if your bill is $2,000, it’s going to be $200 less.”
The New York Post reports that Hochul has previously said it could take more than a year, or two years, for drivers to see the changes reflected on their bills.
The press release notes that the reform will prevent insurance companies from exorbitantly raising rates by setting a legal threshold to eliminate excess profits, returning savings to consumers. It also states that new regulatory safeguards will be created to prevent insurance companies from raising rates without seeking approval from the Department of Financial Services.
“Car insurance rates are driven up by a combination of fraud, litigation, legal loopholes and enforcement gaps,” the release states. “Staged crashes and associated insurance fraud inflate premiums up to $300 a year, according to some estimates. New York’s broken insurance system is not just hurting those who rely on a car to get around, but local businesses that rely on trucking to make ends meet.”
Hochul’s said the reform will protect consumers by prohibiting insurance companies from setting rates based on occupation, education level, or ZIP code.
“Outdated laws, special interest loopholes, and jackpot insurance payouts to bad actors have long forced New Yorkers to pay some of the highest car insurance rates in the nation,” Hochul said in the release. “These hard-fought reforms are a win for every New Yorker who depends on a car to go to work or drop their kids at school. But it’s bigger than that. I’ve heard from farmers who say these reforms will lower the cost of getting their goods to market and from construction supply companies who say this will lower the cost of building. This is how we are delivering on the promise to tackle the affordability crisis head on.”
The American Property Casualty Insurance Association (APCIA) praised Hochul for enacting critical legal system abuse reforms, calling them “measures that will help restore fairness, reduce costs, and improve insurance affordability for New Yorkers.”
“Gov. Hochul is taking an important step to fix a system that has been driving up costs for New York families for far too long,” said Kristina Baldwin, APCIA’s department vice president of state government relations, in a press release. “These reforms will promote fairness in auto accident lawsuits while discouraging abuse that ultimately raises premiums for everyone.”
The release adds that legal system abuse, including inflated claims, excessive litigation, and abuse of non-economic damages, continues to drive up auto insurance costs in New York and nationwide.
“These reforms directly target those pressures by modernizing outdated laws and closing loopholes,” it states. “Experience in other states shows that legal system abuse reforms can deliver meaningful benefits for consumers, including greater market stability and downward pressure on insurance costs.”
Images
Featured photo provided by Hochul’s office