Cars stopped at traffic light in Midtown Manhattan on December 11, 2024. Photo: Ryland West/ALM
New York Gov. Kathy Hochul plans to target auto insurance fraud in the state as a means to drive down rates for drivers.
Hochul announced last week that she wants to curb "runaway litigation" and staged accidents, often organized by fraud rings, in the state. Her plan includes strengthening state regulations and increasing investigations into alleged fraud. She said the state will also begin cracking down on physicians who provide fraudulent diagnoses for victims of fake crashes.
"These common-sense proposals will not only increase auto insurance transparency for New Yorkers, but they will also put money back into people's pockets, especially during a time when the cost of living is just too high," Hochul said at a press conference.
Hochul said she wants to bring back the state's Motor Vehicle Theft and Insurance Fraud Prevention Board to investigate and prosecute suspected fraud.
She also plans to introduce legislation that would ensure prosecutors are able to seek criminal penalties for anyone responsible for organizing a staged accident, not just the person behind the wheel.
She said the state will also begin taking action against New York drivers who register their vehicles in other states, which lowers their auto insurance rates while increasing rates for those who register their vehicle in New York.
New York has some of the highest car insurance rates in the country, averaging nearly $3,000 per year for full coverage, according to a Forbes analysis. In New York City, rates can reach $5,500 per year.
Tom Stebbins, executive director of the Lawsuit Reform Alliance of New York, said the steps could help fix legal gaps that are being exploited by bad actors. He said sophisticated insurance fraud rings in the state who exploit immigrants and people facing homelessness by recruiting them to play drivers in staged crashes.
According to the New York State Department of Financial Services, there were 1,729 staged crashes in New York in 2023. The state is the second highest in the nation for incidents of staged fraud.
"By tackling rampant fraud and reining in the perverse incentives built into New York's existing laws, her proposals will help make insurance more affordable and our roads safer," Stebbins said in a statement. "They'll also ensure the sophisticated actors who orchestrate these schemes are brought to justice and not merely the vulnerable people drawn into them."
Kristina Baldwin, department vice president with the American Property Casualty Insurance Association, also praised Hochul's plans.
"APCIA commends Governor Hochul for championing measures to tackle cost drivers impacting auto insurance premiums in New York State, including proposals to fight the rampant insurance fraud that plagues auto insurance in New York as well as proposals to promote fairness in auto accident lawsuits," she said in a statement. "Reducing these cost drivers will help lower claims expenses and litigation costs, which are a major contributor to rising insurance premiums."
Photo credit: Ryland West/ALM
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