N.Y. fines auto insurers $20M for timely reporting failure

By Doug Bailey

The New York State Department of Financial Services has lowered the boom on three dozen auto insurers, fining them a total of $20 million for failing to timely report new and terminated policies.

The information is needed, regulators say, to determine if insurers are complying with state laws, and to improve road safety, and enforcement. The department said it warned the insurers as far back as 2017 that they were not reporting policy information in a timely matter as required by law. The law, passed in 2000, requires auto insurers to report newly insured vehicles to the state Department of Motor Vehicles within seven days, and must report suspensions and terminations within 30 days.

“Accurate and timely reporting by insurers is critical to protecting New Yorkers on the road,” DFS Superintendent Adrienne Harris said in statement. “These actions demonstrate DFS’s unwavering commitment to holding insurers accountable and safeguarding consumers.”

In consent orders attached to the fines, the DFS said it had met repeatedly with insurers about the late filings and gave the industry multiple “opportunities to address and remediate persistent reporting failures.”

Reporting system called archaic

Insurance companies and trade groups have said the state’s reporting system is archaic, confusing, slow, and not online. That so many insurers were fined is proof that New York’s Insurance Information & Enforcement System needs to be upgraded and improved.
Several insurers have said they would welcome the chance to work with the state to fine tune the reporting system.

A statement by the New York Insurance Association said it looks forward to a modernized auto liability insurance reporting system.

“It is crucial for drivers in the state that the most reliable and accurate reporting method is used so someone is not mistakenly identified as uninsured,” said NYIA President Cassandra Anderson. “…we are eager to collaborate with all stakeholders this session to pass legislation that will officially authorize the implementation of online verification.”

Yet it is unclear why the state issued fines and consent decrees for violations that allegedly occurred six or more years ago. Some believe the New York case may signal a new era of increased scrutiny of insurers and other companies that collect tons of information from consumers and businesses but do not seem so keen on sharing the data.

“I don’t think the primary motivator in the New York case is consumer transparency,” said Peter Jackson, a privacy, security & data protection attorney at Greenberg Glusker Fields Claman & Machtinger LLP. “But to the extent that it may be, you would expect the public to be able to get the information that’s been collected.”

Then again, Jackson said, he could understand why the insurers may feel the fines are a bit unfair since the alleged violations happened so long ago.

Average fine of $550,000

New York issued 37 fines and consent orders with the average fine totaling about $550,000 with larger carriers ordered to pay more. Some of the largest fines included:

State Farm $2.5 million
Zurich $2.2 million
Progressive $2 million
Chubb $1.1 million
GEICO $910,000
Allstate $796,000
Farmers $764,000

The cited companies have until next week to pay the fines and, according to the consent orders, they cannot deduct the fines from their taxes. They also must institute procedures to prevent recurrences.

“Within two months from the date of full execution of this Consent Order, the Company shall provide to DMV a written remediation plan detailing the corrective actions taken or proposed to be taken, and the related projected timeframes, to achieve full compliance with this Consent Order,” the orders say.