After months of statewide speeches, pressure campaigns and promises to tackle soaring insurance costs, portions of Governor Kathy Hochul’s aggressive push to overhaul New York’s auto insurance system have officially made it into the state budget. However, several of her most controversial proposals were either weakened, removed entirely or remain stuck in Albany limbo.
The outcome leaves New Yorkers with a mixed picture. Some new protections aimed at insurance pricing discrimination are now law while several tougher anti-fraud measures championed by Hochul were significantly scaled back during negotiations with lawmakers.
The governor made auto insurance reform one of her signature issues throughout budget season, repeatedly arguing that New Yorkers are paying some of the highest vehicle insurance rates in the country and promising to crack down on fraud she blamed for helping drive costs higher.
Hochul spent months touring the state promoting the initiative and frequently tied rising insurance costs to industries such as trucking and farming, where commercial vehicle premiums have become a growing financial burden.
At the center of Hochul’s argument was the idea that fraudulent insurance claims – including staged crashes – were inflating costs for everyone else.
Her administration pushed for tougher criminal penalties and broader enforcement powers in hopes of discouraging organized fraud rings and ultimately lowering premiums for consumers.
Some of those changes survived budget negotiations.
The newly passed Public Protection and General Government section of the state budget expands New York’s legal definition of insurance fraud to include anyone who “hires, requests, encourages, orchestrates, or invites another individual to stage a motor vehicle accident.”
That language significantly broadens who prosecutors can target in staged crash investigations, potentially allowing authorities to pursue not just drivers involved in fraudulent accidents but also organizers and recruiters operating behind the scenes.
But several of Hochul’s harsher proposed penalties did not make the final cut.
One of the governor’s biggest pushes involved dramatically lowering the monetary thresholds required for serious felony insurance fraud charges.
Under Hochul’s proposal, first-degree insurance fraud, which is currently triggered by fraudulent gains exceeding $1 million, would have been lowered all the way down to $50,000.
That would have transformed many more cases into Class B felonies carrying potential prison sentences of up to 25 years (i.e.: making it easier to prosecute these crimes).
The governor also sought to lower second-degree insurance fraud thresholds from $50,000 to just $3,000.
Neither proposal survived negotiations.
The final budget language leaves existing thresholds in place.
Lawmakers also declined to include another controversial Hochul proposal involving the Motor Vehicle Theft and Insurance Fraud Prevention Board.
The governor had proposed restructuring the board in a way that would have granted greater authority to Rossana Rosado, commissioner of the Division of Criminal Justice Services and chair of the board.
The proposal would have allowed Rosado to act independently if the board “fail[ed] to make any recommendations” related to reducing vehicle theft or insurance fraud.
That restructuring effort was also omitted from the final legislation.
While some of Hochul’s tougher enforcement measures disappeared, lawmakers inserted several new insurance regulations into the final budget package. These changes are being praised by social justice advocates and trial attorneys who had strongly opposed portions of the governor’s original plan.
Not that anything untoward ever happens in Albany, but it makes you wonder what lobbying went on behind the scenes.
Under the newly approved measures, insurers are now prohibited from using a driver’s employment status, education level, home ownership status or ZIP code when determining auto insurance rates.
Advocacy organizations including The Black Institute had lobbied heavily for those changes, arguing such factors unfairly penalized lower-income and minority communities.
The final legislation also requires insurance companies to obtain approval from the New York State Department of Financial Services before implementing rate increases.
The New York State Trial Lawyers Association, which had fiercely criticized Hochul’s original anti-fraud proposals, praised the consumer-focused additions.
“Regulating insurance companies that delay, deny and defend as their business model is the future of affordability in New York,” said Sabrina Rezzy, a spokesperson for the NYS Trial Lawyers Association.
Rezzy added that passage of the legislation “proved that the path to affordability starts with regulating insurers, not running over consumer rights.”
Not all of Hochul’s insurance proposals are dead though.
Additional pieces of her broader insurance reform package are reportedly included within the Transportation, Economic Development and Environmental Conservation budget bill, which lawmakers are expected to continue debating after returning to Albany.
The governor’s office declined to comment on which specific provisions survived or were altered, saying they were waiting until the full package receives final approval.
For Hochul, the result appears to be a partial victory. Some of her crackdown on staged accidents survived, but most of her toughest enforcement measures did not.
