New York State Department of Financial Services outlines Governor Hochul proposals to lower auto insurance rates through anti-fraud enforcement and tighter claims rules

The New York State Department of Financial Services published details of Governor Kathy Hochul’s proposed 2026 State of the State package to reduce auto insurance premiums in New York State, centred on a coordinated crackdown on staged-crash fraud and changes to claims and litigation rules that the administration says contribute to high rates. The proposals also include new policyholder transparency requirements and mandated availability of discounts for drivers who opt into technology-based safe-driving programs. The plan would reinvigorate the State’s Motor Vehicle Theft and Insurance Fraud Prevention Board and task DFS, the Department of Motor Vehicles, the Division of Criminal Justice Services and the New York State Police with a more proactive, coordinated enforcement approach, including dedicated resources at DFS and NYSP and closer coordination with prosecutors. It cites 38,270 suspected motor vehicle insurance fraud incidents reported to the DFS Insurance Frauds Bureau in 2023, including 1,729 staged crashes, and proposes expanded tools to pursue organizers of staged accidents and to sanction medical providers involved in fraudulent diagnoses, alongside action against illegal out-of-state vehicle registrations. On the insurer side, the package would extend the current 30-day timeframe for insurers to identify, investigate and report fraud and reduce barriers to alleging fraud in court, while preserving consumer protections including allowing policyholders to collect 2 percent interest on payments held back during investigations. Other proposed legal changes would cap non-economic damages for drivers engaged in certain unlawful conduct at the time of an accident, including uninsured motorists, individuals convicted of impaired driving and individuals committing or fleeing a felony, and would limit non-economic damages for drivers deemed mostly at fault. The plan would also tighten the no-fault “serious injury” threshold by introducing objective medical standards, require insurers to notify policyholders of rate changes with explanations and additional context on written request, and require insurers to offer discounted personalised rates for drivers who opt into monitoring programs using devices, cameras or smartphone apps. If the reforms are enacted, the Governor would direct DFS to re-examine the Excess Profit Law threshold trigger to ensure savings are passed back to policyholders.