Albany lawmakers urged to approve Hochul's auto insurance reforms

(The Center Square) – Business groups are urging New York lawmakers to crack down on staged accidents and other auto insurance fraud by overhauling the state's liability laws.

In a letter to Senate Majority Leader Andrea Stewart-Cousins and House Speaker Carl Heastie on Tuesday, a coalition of business groups called on them to pass Gov. Kathy Hochul's proposal to strengthen state regulations, ramp up investigations of alleged insurance fraud, and target physicians who provide bogus diagnoses for victims of staged crashes.

"These are common sense measures to crack down on auto insurance fraud, bring our liability standards in line with 33 other states, and remove incentives for filing unnecessary and expensive lawsuits," they wrote to lawmakers.

The groups, which include the Business Council of New York and the New York State Economic Development Council, said Hochul's plan would update New York’s liability laws "without weakening protections drivers and bystanders rely on." They said the reforms would also preserve coverage for medical bills and lost wages, while preventing fraud and profiteering.

"New York’s current rules leave the system vulnerable to inflated claims and opportunistic lawsuits that raise costs for everyone," they wrote. "Bringing our standards closer to those used in peer states would reduce litigation while preserving access to the courts for people who suffer serious, legitimate injuries."

New Yorkers pay some of the highest car insurance rates in the nation – totaling just over $4,000 annually on average, nearly $1,500 above the national average, according to state and federal data. Government and industry groups say insurance rates are driven up by a combination of fraud, litigation, legal loopholes and enforcement gaps.

In 2023, there were 1,729 staged crashes in New York, which ranks second highest in the nation for incidents of staged fraud, according to the latest data from the New York State Department of Financial Services.

Under Hochul's plan, the state Motor Vehicle Theft and Insurance Fraud Prevention Board would be revived and empowered to investigate and prosecute insurance fraud. It would also be authorized to work with district attorneys "to help build cases that put an end to the organized fraud that’s robbing New Yorkers via elevated insurance rates."

The governor also said she plans to take action against New York drivers who illegally register their vehicles in other states, which she said artificially decreases their coverage and raises costs for law-abiding New York drivers.

Hochul also plans to file legislation to allow prosecutors to seek criminal penalties against individuals responsible for organizing staged accidents, including physicians and other health care workers who sign off on phony medical reports that often result in "enormous" payouts.

A poll released this week by Beacon Research found 86% of New Yorkers back the governor's proposed reforms to the state’s auto insurance system, while 75% of the more than 1,000 voters surveyed say auto insurance costs are a "financial burden" on their household. Support for the reforms is strong across partisan lines, according to the polling group.

"From bagels to baseball, New Yorkers are known for arguing about everything – but on one issue we’re completely aligned: car insurance rates are too damn high, and Albany has to fix it,” James Freedland, a spokesman for Citizens for Affordable Rates, said in a statement. "Lawmakers need to take action to put that money back where it belongs – in New Yorkers’ pockets."