Assembly, Senate Budget Plans Dismiss Auto Insurance Cost Concerns
The New York State Senate and Assembly today released the details of their respective 2027 budget proposals. Glaringly absent, however, was any mention of auto insurance affordability.
“The Senate and Assembly one-house budget proposals contain many initiatives aimed at improving affordability for New Yorkers,” said Big I New York President and CEO Lisa Lounsbury, “yet we are deeply disappointed — and frankly surprised — that neither chamber made even a mention of the Governor’s proposed auto insurance reforms.
“Today, the State Legislature sidestepped meaningful action to address staged accident fraud and excessive litigation costs,” Lounsbury said. “By remaining silent on this issue, they are ignoring one of the most significant drivers of insurance affordability in New York: runaway legal costs that have helped earn our state the troubling designation of a ‘judicial hellhole.’”
“Governor Hochul’s proposals are a constructive starting point to confront fraud and reduce systemic cost drivers that ultimately impact every driver and business in the state. We will be reviewing the legislative proposals in greater detail, but policymakers should be prepared to explain why addressing fraud, abuse, and litigation costs — reforms that could meaningfully lower insurance costs and expand access — have been set aside in this process.”
Gov. Kathy Hochul has been traveling the state, hosting news conferences and events spotlighting her proposal to address auto insurance fraud, abuse, and frivolous lawsuits. Meanwhile, over the past several weeks, Big I New York members have been contacting their state lawmakers, urging support for the measures.
Despite positive news coverage, opinion editorials, grassroots calls to action, legislative visits, and other advocacy efforts supporting the governor’s proposed reforms, both the Senate and Assembly omitted the proposals entirely. More concerning, neither chamber advanced any alternative proposals aimed at reducing auto insurance costs for New Yorkers.
On the homeowners front, the Senate did include a modified version of the governor’s Homeowners’ Insurance Benchmark Loss Ratio proposal. The language requires a re-filing of homeowners rates when carriers fall below a to-be-determined homeowners loss ratio. The Senate version increased the lookback period from two to three years and explicitly includes an insurer’s “investment ratios.”
Both iterations are extremely concerning and do not reflect the realities of how carriers price homeowners insurance. Big I New York testified before the New York Joint Legislative Hearing on Economic Development that homeowners insurance relies on pooling premiums over many years to prepare for infrequent but severe loss events. Evaluating losses over only a 24-month period fails to capture the long-term nature of the risk carriers assume.
This novel regulatory approach could ultimately lead to inadequate reserves, reduced insurer participation in the market, and fewer coverage options available to New York homeowners.
Conclusion
Grassroots legislative advocacy is now more important than ever. If you have not contacted your state lawmakers to advocate for the governor’s auto insurance reform proposal, please visit the Big I New York Grassroots Action Center and act today to deliver a pre-drafted message of support!
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