Governor Hochul presented her State of the State address last week. The State of the State is an effort by governors to set the policy priorities of the upcoming legislative session. Usually, the speech focuses on topics that are sure to resonate with the voting public and with this year being one in which the governor faces the voters, it did not disappoint.
The governor highlighted her proposals to tackle the “affordability” crisis facing New York. In her address she focused on two specific areas: the cost of energy and the cost of insurance .Like all other State of the State addresses, her speech tended to be long on rhetoric and short on the details of how she will accomplish those goals.
When it came to auto insurance “reforms,” however, the governor did offer some detailed plans. The governor announced a series of measures that she says will bring down auto insurance rates. Her proposals focused mainly on measures to combat fraud: The governor alleged that “increasingly sophisticated actors stage elaborate accidents, designed to allow for ‘jackpot’ payouts from insurance companies or jury awards. ”The governor proposed to crack down through coordination among relevant state and local agencies, as well as increasing criminal penalties. The governor also said that she would offer a plan to “take on medical providers who participate in fraud by signing off on phony medical diagnoses.”
The governor also proposed to “increase the timeframe insurers have to report fraud and reduce barriers to alleging fraud in court, giving insurers more time to investigate claims and avoid paying fraudulent ones.” She said that she would balance this “increased flexibility” with consumer protections, such as allowing policyholders to “collect 2 percent interest on any payment insurers hold back as an incentive to ensure insurers continue to move quickly.”
There is no doubt that New York has had among the highest auto insurance premiums in the nation for many years. The rate charged by insurers is subject to oversight by New York state government and what was most notable about the governor’s proposals was how little was offered to bolster regulation or reform the industry’s practices.
If New York has long had high auto insurance premiums, among the questions that must be asked is why is the governor advancing her measures in 2026?The argument is that auto rates are skyrocketing, in a manner that is different than in years past.
While it is true that premiums have been going up in New York, that is the case nationwide. What is also true is that New York’s recent increases are not among the highest in the nation. That sad award goes to the states of Arkansas, California, Colorado, Florida, Minnesota, New Jersey, North Carolina, and Washington.
Louisiana and Florida are often listed among the top states when it comes to auto coverage. Those states “share similar risk characteristics. Both have high vehicle theft rates, frequent extreme weather losses and high rates of insurance fraud. These risk factors are inherently costly to insurance carriers and reinsurance companies, which could explain why both states tend to have high premiums.”
This is one issue that cries out for a detailed examination of the root causes of the problem. Let’s start off with the observations that auto insurance coverage is mandatory in New York – you can’t register or drive your car lawfully without it. As a result, drivers are a captive market and despite the barrage of television and social media ads, insurers make it hard to comparison shop.
For car owners in New York, one obvious problem is that so much of the information collected by the state is not easily obtained by the public. As mentioned above, Louisiana and Florida have seen high auto rates due to some extent as the result of more frequent bad weather. Perhaps the reinsurance industry – the behind-the-scenes insurers who insure retail insurance companies to protect them from unforeseen risks – is jacking up costs for their coverage and that’s driving some of the increase.
Legislation has been offered that would help the public better understand the underlying expenses of the insurance industry. But that effort has been blocked for many years. This legislation started with a basic premise: require an independent government report on the expenses of the auto insurance industry. A fair review should provide policymakers with a basis for policy changes, if needed. Only when the full data set is publicly available can there be an evidence-based discussion of insurers’ claim experience and costs with respect to auto insurance.
Of course, waiting for legislation – even the governor’s proposals – takes time and may never happen. But the governor can take steps to help New York drivers to comparison shop for the best insurance deals. Drivers should not be paying hundreds of dollars – if not thousands of dollars – more for their insurance coverage when they easily could be comparison shopping on their home computer, laptop or smart phone.
For almost two decades, New York State produced an annual guide to passenger auto insurance premiums in the state. That publication was recently halted. Other states, however, offer this useful information through modern technology. For example, the state of California provides rate quotes through the Internet. Thus, there is no technological barrier to furnishing personalized auto insurance rate quotes to help consumers comparison shop. The obstacles purely are political.
While the governor has offered her recommendations that purport to curb auto premiums, the Legislature now has the authority – and the responsibility – to hold public hearings specifically on her plans – what she left in and what she left out. Meanwhile, the governor should use her executive authority to help drivers to shop smart and possibly save big bucks.
Blair Horner is senior policy advisor with the New York Public Interest Research Group.
The views expressed by commentators are solely those of the authors. They do not necessarily reflect the views of this station or its management.
