New York governor enacts measures to combat fraud, cap insurer profits, and prohibit rate-setting based on zip code and other factors.
8:21 PM
New York Gov. Kathy Hochul on Wednesday signed into law measures included in the state budget designed to reduce auto insurance costs for motorists across the state.
The legislation, described as one of Hochul's top priorities during the budget season, targets fraud and limits damages paid to what officials characterized as bad actors. The laws redefine what constitutes a "serious injury" for purposes of pain and suffering damages, cap excess profits that insurance companies generate, and prohibit insurers from setting rates based on zip code, homeownership, occupation, or education level.
"Outdated laws, special interest loopholes and jackpot insurance payouts to bad actors have long forced New Yorkers to pay some of the highest car insurance rates in the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 a statement. "These hardfought reforms are a win for every New Yorker who depends on a car to go to work or drop their kids at school."
New Yorkers currently pay an average of $1,800 annually for car insurance, according to available data cited in connection with the reforms.
The Lawsuit Reform Alliance of New York, which supported the measures, characterized the changes as disrupting a business model that rewards fraud. Executive Director Tom Stebbins said the reforms were backed by a coalition that included unions, nonprofits, small businesses, and local governments.
"With fewer incentives to file unnecessary lawsuits and exaggerate claims, billboard lawyers will have fewer opportunities to get rich while the rest of us pay higher prices and inflated bills," Stebbins said in a statement.
The New York State Trial Lawyers Association, which opposed the measures, framed the reforms differently. In a statement, the group said the path to affordability required regulating insurance companies that use delay, denial, and defense as a business model while protecting consumer rights.
The signed legislation represents the culmination of negotiations between the governor's office and various stakeholders over the structure of New York's auto insurance market.
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