New York Governor Kathy Hochul and legislative leaders are considering tighter controls on auto insurance rate increases, as budget talks remain stalled over broader reforms to the state’s insurance laws.
The proposal would give regulators more authority to limit consumer cost increases by requiring insurers to seek prior state approval before raising rates.
The talks form part of negotiations over New York’s roughly $260 bn state budget, which has been delayed for weeks. New York’s auto insurance reform debate is escalating as Governor Kathy Hochul presses for legislation aimed at curbing litigation linked to vehicle accidents.
The dispute centers on Hochul’s plan to reshape auto insurance rules, including changes affecting accident payouts, staged crash enforcement, and eligibility for pain and suffering claims.
Hochul said that insurance company pricing practices remain under review. She said the state is examining how insurers set rates and which criteria they apply, though she avoided giving details while negotiations continue.
Yes, we are looking closely at how insurance companies set their rates and what criteria they use. The insurance companies, we’re taking a close look at their practices. That’s all I’ll say on that until the details are out.
Kathy Hochul, New York Governor
The proposal focuses on New York’s flex rating law, which has been in place since the late 2000s. Current rules allow insurers to raise rates by up to 5% within a 12-month period without prior state approval, subject to certain limits. Increases above 5% already require approval from the Department of Financial Services.
New York will lift rideshare insurance rates about 25% over three years after American Transit’s collapse, pushing higher costs toward drivers and fares.
One option under discussion would remove that flexibility entirely. Insurers would need approval before implementing any rate increase.
Another option would lower the threshold, potentially to 2%, while preserving some limited pricing flexibility.
Assemblymember David Weprin, who chairs the Assembly insurance committee, confirmed the issue has surfaced in negotiations. He said the rate approval discussion is not holding up the budget and is likely to move forward.
The proposal could draw resistance from auto insurers, which have largely supported Hochul’s broader reform plan.
Insurers argue legal and claims costs drive premium pressure, while lawmakers want stronger guarantees that any savings will reach consumers.
Hochul’s wider plan would restrict payouts for drivers found mostly at fault in crashes. It would also target staged accidents and narrow the definition of serious injury, which determines who can seek compensation for pain and suffering.
The debate has drawn major lobbying activity. Uber has spent heavily supporting the governor’s proposal, while the New York State Trial Lawyers Association has pushed back against the changes.
The fight reflects competing financial interests around claims costs, litigation, and consumer premiums.
Hochul argues that reducing insurer costs should lower premiums for drivers. New York already limits insurer profits to 21% over a six-year period, with excess profits returned to ratepayers.
Lawmakers, though, want additional tools to ensure carriers reduce rates if reforms cut their costs.
That concern pushed flex rating changes into the budget talks. According to Beinsure analysts, stricter rate approval rules would shift more pricing control toward regulators, creating a trade-off between consumer protection and insurer pricing flexibility.
Budget negotiations are expected to continue in the coming days. Lawmakers passed a seventh short-term budget extender, allowing state workers to keep receiving pay while talks continue.
Assembly Ways and Means Committee Chair J. Gary Pretlow said lawmakers are moving closer on multiple issues, including auto insurance. The final deal will show whether Hochul’s liability reforms survive with stronger rate oversight attached.
