Governor Hochul Issues New Guidance to Implement Reforms Aimed at Lowering Auto Insurance Premiums for New Yorkers

Governor Kathy Hochul today announced that the New York State Department of Financial Services (DFS) has issued new guidance to insurers, implementing reforms enacted in the Fiscal Year 2027 Budget to help bring down the cost of auto insurance rates and combat fraudulent claims across New York State.

The enacted budget delivers sweeping reforms to address key factors driving up auto insurance premiums, including insurance fraud and excessive litigation costs. The guidance issued by DFS is an important step to translate these reforms into meaningful cost savings for New Yorkers.

"Since taking office, I have been committed to making New York safer and more affordable, and that includes driving down the cost of auto insurance," Governor Hochul said."For most New Yorkers, driving is a necessity to get to school, work or run daily errands and it's imperative that we ensure these savings are passed down to hard working families."

New York State Department of Financial Services Acting Superintendent Kaitlin Asrow said, "Today's guidance makes clear the Department's expectations that insurers include expected savings from Governor Hochul's reforms in any pending and future rate applications. The Department is engaging in a collaborative approach with all stakeholders to lower costs for New Yorkers."

State Senator Jamaal T. Bailey said, "For years New York families have been feeling the financial burden of high automobile insurance costs. The recently enacted automobile insurance reforms seek to address these rising costs, while at the same time ensuring that innocent New Yorkers who are legitimately injured can still receive the compensation they deserve. I applaud Governor Hochul for her ongoing commitment to making sure these reforms are properly and expeditiously implemented, as well as Majority Leader Andrea Stewart-Cousins, Speaker Heastie, my colleagues in government and all the dedicated staff members who worked so hard on this endeavor."

Assemblymember David Weprin said, "I commend Governor Hochul and Acting Superintendent Asrow for helping deliver meaningful savings to drivers across our state while preserving protections for those who are legitimately injured. These reforms represent an important step toward making auto insurance more affordable for New Yorkers while strengthening the integrity of our insurance system. By cracking down on fraud, reducing abusive litigation and ensuring that insurers reflect these savings in future rate filings, we are addressing some of the key drivers of rising premiums."

The Department's guidance outlines expectations for all insurers authorized to write motor vehicle insurance in New York State to update their pricing models to integrate the impact of these reforms in all pending and future rate filings. Reforms addressed in the guidance include:

• Expanded Definition of "Fraudulent Insurance Act": Prosecutors are now able to seek criminal penalties against all individuals responsible for organizing or facilitating a staged accident, not just the individual behind the wheel.
• Limiting Damages for Individuals Engaging in Unlawful Behavior at the Time of an Accident:Damages are capped for drivers engaging in criminal behavior at the time of an accident to ensure that drivers who violate the law, including uninsured motorists, drunk drivers and drivers in the act of committing a felony, do not receive disproportionate financial recoveries at the expense of policyholders.
• Tightening the Serious Injury Threshold: The enacted budget modifies the definition of "serious injury" so that damages for pain and suffering or emotional distress are reserved for those persons able to objectively demonstrate that they have suffered serious injuries.
• Limiting Damages for Individuals Who Are "Mostly" At Fault in Causing an Accident: Drivers found to be primarily responsible for causing an accident are now unable to sue other parties for outsized damage payments. This change puts New York in line with most other states.
• Updates to Approval Authority Over Auto Insurers' Rates: New limits have been put in place requiring companies to seek express prior approval from DFS before any upward rate changes.

DFS-regulated insurers are expected to review the guidance to determine what steps they need to take to comply with the new requirements, including incorporating the anticipated savings from these reforms in all pending and future auto insurance rate filings.

This guidance builds on the Department's efforts to address property insurance costs, including guidance on mandatory premium discounts, guidance to combat discrimination in affordable housing markets, and DFS's Insurance Discounts and Savings webpage.

A copy of the guidance can be found on the Department's website.