New York insurance agent groups fighting an assortment of fee and fine increases proposed by Governor Eliot Spitzer appear to have won one battle in the state Senate regarding a $15 Motor Vehicle insurance fee increase.
The proposal, outlined by Gov. Spitzer in his 2008-09 Executive Budget, would raise the Motor Vehicle Insurance fee from $5 to $20 on most vehicles registered in the state. The fee increase would show up on consumers' insurance policies. Agent associations have opposed this increase because of the cost to consumers.
Also in the budget are proposals to jack fines for agent license violations by thousands of dollars.
The Independent Insurance Agents and Brokers of New York (IIABNY) complained that the fee ballooned from its original purpose in 1992 as a temporary $1 charge on registered vehicles to finance state police efforts in combating automobile fraud and insurance theft. In 2003, the year the fee was to have been phased out, it was raised to $5, IIABNY said.
Bruce Barry, spokesman for IIABNY, said the association has raised objections to the increase because of its potential impact on consumers, particularly companies that own many vehicles. "If you work out the numbers, for a company that might have 20-30 vehicles, $20 per vehicle is going to add up into the hundreds of dollars," Mr. Barry said.
Ellen Kiehl, executive director of the Professional Insurance Agents of New York, said the proposed fee increase has not been received favorably in the state Senate. "The Senate apparently is set to try and block those fees from going up from $5 to $20," she said.
In a statement released late last week, the New York State Senate Majority classified the fee increase as essentially a tax hike. Senate Majority Leader Joseph L. Bruno (R-Rensselaer) said, "New Yorkers can rest assured that it won't be part of the budget we ultimately adopt."
Both the Senate and the State Assembly are expected to release their respective one-house budget bills this week.
Agent associations will also have their eye on whether Gov. Spitzer's proposed fine increases for certain insurance violations will receive legislative approval.
IIABNY released a statement citing particular concern with fine increases that would increase by two to as much as 20 times. For example, the association noted that the fine for "violation of the Insurance Law" would increase from $500 to $10,000; the fine for "conducting insurance business without a license" would increase from $1,000 to $10,000; and the fine for "doing business as agent, broker or adjuster without a license" would double from $5,000 to $10,000.
Michael Barrett, IIABNY's legislative representative, said he is optimistic that the fine increases will be either reduced or eliminated. "At this point, knock on wood, both houses are doing their one-house budget bills, and I think there's a good chance that [the fines] will be significantly reduced or taken out altogether."
He said he would have a better idea on the future of the increases when the one-house budget bills are released, "but the people I've been working with tell me there's a good chance that [the fines will] be taken out totally."
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