Executive Budget Proposal Heavy on P&C Insurance Reforms
Governor Kathy Hochul has released the FY27 Executive Budget, officially launching the sprint toward the April 1 deadline for a State Budget agreement. As anticipated, affordability took center stage, with auto and homeowners insurance playing prominent roles.
The proposal includes several initiatives aimed at combating auto insurance fraud and abusive legal practices that drive up rates for all New Yorkers, including:
- Amending the definition of “serious injury” to raise the threshold for suing for pain and suffering beyond no-fault benefits.
- Capping pain and suffering damages at $100,000 when the injured claimant is driving uninsured, impaired, or committing a felony.
- Barring recovery of damages when a claimant’s share of fault exceeds that of the person or persons against whom recovery is sought.
- Extending from 30 to 60 days the time period for auto insurance carriers to investigate and report suspected fraud to the Department of Financial Services.
- Expanding the definition of a “fraudulent insurance act” to explicitly include staging a motor vehicle accident and lowering monetary thresholds for certain insurance and health care fraud felonies.
- Modernizing the New York State Motor Vehicle Theft and Insurance Fraud Prevention Board, strengthening its ability to support fraud prevention efforts.
The proposal also reinforces the governor’s focus on employing technology and risk-mitigation strategies to reduce claim frequency and severity and lower claims adjustment costs. For auto insurance, the budget proposes a dashboard camera discount to help reduce expenses associated with accident investigations. For homeowners insurance, the governor calls for a renewed emphasis on discounts for fire, theft, water, wind, and other loss-prevention and mitigation measures.
For both auto and homeowners insurance, carriers would be required to provide pre-renewal justifications for premium increases of 10% or more. They would also have to inform policyholders that they have the right to request a written explanation of premium increases. Carriers would be required to provide that explanation within 20 days of the request. For homeowners insurance only, the governor proposes establishing a loss ratio benchmark that would require carriers to refile rates if their loss ratio falls below the benchmark for two consecutive years.
Regarding Workers’ Compensation (WC), the budget proposes a new fee to fund grants supporting district attorneys’ offices’ WC fraud units. It would also allow all licensed New York State medical providers in good standing to treat WC patients.
In the coming weeks, the State Assembly and Senate will:
- Hold hearings with agency leaders;
- Release their budget resolutions; and
- Engage in three-way negotiations to finalize the State Budget.
Big I New York will closely evaluate each proposal for its impact on consumers and the property and casualty insurance industry and advocate for policies that support a healthy insurance marketplace.
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