The Peru Gazette

Guidance Requires Auto Insurance Entities To Incorporate Anticipated Savings from Reforms into Current and Future Rate Filings

Albany, nY (July 1, 2026) – Governor Kathy Hochul today announced that the New York State Department of Financial Services (DFS) has issued new guidance to insurers, implementing reforms enacted in the Fiscal Year 2027 Budget to help bring down the cost of auto insurance rates and combat fraudulent claims across New York State.

The enacted budget delivers sweeping reforms to address key factors driving up auto insurance premiums, including insurance fraud and excessive litigation costs. The guidance issued by DFS is an important step to translate these reforms into meaningful cost savings for New Yorkers.

The Department’s guidance outlines expectations for all insurers authorized to write motor vehicle insurance in New York State to update their pricing models to integrate the impact of these reforms in all pending and future rate filings. Reforms addressed in the guidance include:

• Expanded Definition of “Fraudulent Insurance Act”: Prosecutors are now able to seek criminal penalties against all individuals responsible for organizing or facilitating a staged accident, not just the individual behind the wheel.
• Limiting Damages for Individuals Engaging in Unlawful Behavior at the Time of an Accident: Damages are capped for drivers engaging in criminal behavior at the time of an accident to ensure that drivers who violate the law, including uninsured motorists, drunk drivers and drivers in the act of committing a felony, do not receive disproportionate financial recoveries at the expense of policyholders.
• Tightening the Serious Injury Threshold: The enacted budget modifies the definition of “serious injury” so that damages for pain and suffering or emotional distress are reserved for those persons able to objectively demonstrate that they have suffered serious injuries.
• Limiting Damages for Individuals Who Are “Mostly” At Fault in Causing an Accident: Drivers found to be primarily responsible for causing an accident are now unable to sue other parties for outsized damage payments. This change puts New York in line with most other states.
• Updates to Approval Authority Over Auto Insurers’ Rates: New limits have been put in place requiring companies to seek express prior approval from DFS before any upward rate changes.

DFS-regulated insurers are expected to review the guidance to determine what steps they need to take to comply with the new requirements, including incorporating the anticipated savings from these reforms in all pending and future auto insurance rate filings.

This guidance builds on the Department’s efforts to address property insurance costs, including guidance on mandatory premium discounts, guidance to combat discrimination in affordable housing markets, and DFS’s Insurance Discounts and Savings webpage.

A copy of the guidance can be found on the Department’s website.