New York regulators have proposed requiring auto insurers to obtain prior approval before implementing any increase in private passenger insurance rates. The New York State Department of Financial Services said the change forms part of auto insurance reforms included in the state’s 2027 budget.
Under the current flex-rating system, insurers may implement up to two overall average rate increases without prior DFS approval if their combined effect remains within 5%. The proposed regulation would remove that flexibility for upward rate changes.
Insurers would instead need express approval from DFS before raising private passenger auto rates. The department said each proposed increase would therefore undergo regulatory review before taking effect.
The proposal also introduces additional disclosure requirements. Insurers would need to explain rate changes to policyholders, including whether a reduction resulted from savings associated with the new auto insurance reforms.
This regulation strengthens transparency for New York policyholders by ensuring that any increase in private passenger auto rates is subject to comprehensive and independent review. The proposal will remain open for public comment through Nov. 9.
Kaitlin Asrow, DFS Acting Superintendent
The wider reform package also restricts several factors insurers may use when setting rates. Homeownership status, occupation, education level and ZIP code are among the factors covered by the new limits.
Insurers may also be required to return excess profits to policyholders. Separate provisions address insurance fraud, litigation costs and damages arising from auto accidents.
The reforms broaden the definition of a fraudulent insurance act. Prosecutors are now able to pursue criminal penalties against people who organize or facilitate staged accidents, rather than limiting action to the person driving the vehicle.
Damages are also restricted for people engaged in certain unlawful conduct at the time of an accident. The provisions cover uninsured motorists, impaired drivers and people committing a felony when the crash occurs.
New York has also revised its serious injury threshold. Claims for pain and suffering or emotional distress will require objective evidence of a qualifying serious injury.
Another provision limits recoveries for motorists found mostly responsible for causing an accident. Drivers primarily at fault will face tighter restrictions on claims against other parties.
DFS has told insurers to consider the expected effect of these reforms when preparing rates. The department said companies should incorporate anticipated savings into pending and future auto insurance filings.
Governor Kathy Hochul said the proposed prior approval requirement is intended to increase oversight of auto insurance pricing. The regulation would add another layer of review as insurers adjust rates under the broader reform package.
