[FEATURE] 

Auto Insurance Under the Knife

Standing Committee on Insurance Holds Public Hearing to Examine High Costs and Coverage Gaps

By Betty Flood and Casey O’Brien

ALBANY, N.Y.—The New York Assembly Standing Committee on Insurance held a public hearing on April 10th to examine the automobile insurance market in the state. The hearing was conducted by Committee Chair Assemblyman Kevin A. Cahill (D/WF-Kingston), as well as Committee members Thomas J. Abinanti (D/IND-Westchester), Will Barclay (R/IND/C-Fulton), Gary D. Finch (R/C/IND-Auburn), Nick Perry (D/WF-Brooklyn), and Phil Steck (D-Schenectady).

The hearing examined a plethora of issues within the automobile insurance business that related to the high costs and coverage gaps found in the New York market and astounded Chairman Cahill with the intricate testimony of the witnesses. “New York State has the most expensive automobile insurance in the nation,” Chairman Cahill stated in his opening remarks.

First to testify was Robert Easton, Executive Deputy Superintendent of the Insurance Division at the New York State Department of Financial Services (DFS).

“New York hosts a vibrant and competitive auto insurance marketplace. Today, over 100 separately licensed companies offer coverage to New York drivers,” Easton said. “Measures taken by the Legislature, such as the introduction of multi-tier programs in 1995, have enabled insurers to write auto insurance in the voluntary market for a wide array of underwriting profiles. As a consequence, most consumers can find coverage that fits their needs.”

“The sufficient availability of coverage is perhaps best reflected in the trending depopulation of the New York Automobile Insurance Plan (also known as the “assigned risk” market), New York’s insurer of last resort. In the 1990’s, more than one in six vehicles were insured in the assigned risk market; today the AIP has less than one-half of one percent of the automobiles registered in the state,” said Easton. “There has been an unprecedented reduction in the population of the AIP. From a peak of 1.7 million vehicles in the early 1990’s, there are now fewer than 50,000 vehicles insured through the Plan.”

The DFS is encouraging insurers to offer a “usage-based insurance” program, which provides discounts to the consumer if they opt in. “Many UBI programs involve the use of a telematics device – a gadget is installed in a vehicle – that gathers data about an insured’s driving habits, such as the time of day a person drives, or her acceleration and breaking patterns. That information can be used to better align pricing to risk, and to inform consumers about aspects of their driving habits that insurers consider most relevant to pricing. In that manner,” Easton continued, “policyholders can modify their behaviors and drive more safely, which can lead to fewer accidents, and, in the end, help lower premiums for drivers statewide.”

Easton went on to define the minimum coverage requirements for New York drivers; Liability Insurance, Personal Injury Protection (PIP), and Uninsured Motorist coverage.

Liability insurance provides payment to third parties for pain and suffering should the operator or owner of a vehicle be found legally responsible for injury or property damage. The minimum coverage is $25,000 per person and $50,000 per accident for bodily injury. In the event of death, the coverage is $50,000/$100,000, and $10,000 is for property damage.

PIP, also known as no-fault, provides up to $50,000 to the occupants of a vehicle or to pedestrians struck by a vehicle. “PIP is primarily comprised of medical expenses and lost wages, but not pain and suffering,” Easton said. PIP has remained at $50,000 since the no-fault law in 1973 was passed.

The uninsured motorist coverage provides payment for pain and suffering if it is associated with bodily injury to occupants of a vehicle or pedestrians if the motorist was driving illegally without insurance. “The minimum amounts of coverage are $25,000 per person, $50,000 per accident, and $50,000/$100,000 in the event of death,” said Easton.

“Most drivers in New York carry more coverage than the basic minimum limits. But many who opt for the minimum limits live in areas of the State where claims experience is among the worst, and where insurance costs are among the highest,” said Easton.

Besides the minimum limits, insurers are required in New York State to offer supplementary uninsured or underinsured motorist coverage. Consumers can also opt to purchase collision and comprehensive coverage; collision coverage pays the insured regardless of fault for damages to their car with another car or object. Comprehensive coverage will cover damages made to their car from incidents such as theft or flooding.

“Insurers typically offer collision and comprehensive coverages with deductibles, which gives policy holders the flexibility to decide how much of the cost they want to absorb in repairing or replacing a vehicle. Not surprisingly, consumers who opt for higher deductibles tend to pay less in premiums,” said Easton.

In March of 2012, Governor Cuomo announced a two-pronged statewide initiative aimed at removing some of the cost drivers or delays from the no-fault system. The DFS amended Regulation 68, which effectuates the no-fault law.

By amending Regulation 68, they could speed claims resolutions by “establishing certain timeframes to enable insurers to take prompt action on claims; clarifying that health providers should cooperate with insurers when certain claims information is requested; and authorizing insurers to deny claims payments when no services are rendered by providers or when the fees charged by providers exceed those permissible under the governing fee schedules.”

The DFS also worked upstate and downstate to seek out doctors and health providers who provide unnecessary or excessive medical treatments to maximize insurance payments. The DFS is aiming to bar these doctors and health providers from participating in the no-fault system, and has already banned 18 physicians or health care providers from billing for no-fault claims, and have many more under investigation.

Testifying second were President of the New York Insurance Association (NYIA) Ellen Melchionni, Gary Henning, Vice President of the Northeast Region for the American Insurance Association (AIA), and Kristina Baldwin, Assistant Vice President of Property Casualty Insurers Association (PCI).

Melchionni began her testimony urging the Legislature to take a zero tolerance policy with auto insurance fraud. “No-fault and auto accident fraud is a public safety issue and costs New Yorkers millions of dollars a year,” she said.

“Auto insurance premiums in New York for 2012 added up to $12.6 billion. The New York auto insurance market is competitive, with over 60 insurance carriers writing private passenger auto policies and 120 carriers writing commercial auto insurance policies,” Melchionni said. “Turning to no-fault specifically, New York’s Personal Injury Protection benefit of up to $50,000 is second in the nation among no fault states with only Michigan providing a higher PIP benefit level.”

Speaking on fraud, Melchionni said the reason for thriving fraud was inaction by public policymakers, “making our roadways more dangerous, diminishing the quality of health care in our state, and adding financial burdens to New York families.”

As part of the zero tolerance policy, Melchionni suggests the following measures:

• Making staging an auto accident a felony crime, ending fraudulent billing from fly-by-night durable medical equipment providers;

• Allowing the retroactive cancellation of fraudulently obtained auto insurance policies; Requiring health providers to prove that a treatment is medically necessary.

NYIA supports the following bills:

• S3547 and S3540, both introduced by Senator Seward;

• A7989, introduced by Assemblyman Weprin;

• Assemblyman Heastie’s bill A3774-A and its companion bill in the Senate, S1959-A sponsored by Senator Golden, which would allow retroactive cancellation of the automobile policy in the first sixty days where the payment turns out to be fraudulent;

• S3545, Senator Seward, which proposes two additional consumer protection enhancements.

“One proposal to relax the serious injury threshold, A2362 by Assemblyman Titone and S880 by Senator Bonacic, would not merely update the current definition of ‘serious injury’ to reflect modern medical technology,” Melchionni said.

NYIA opposes attempts to modify the current law-which governs the consumer’s choice to purchase supplementary uninsured and underinsured motorist coverage and changes in the consumer’s ability to choose the amount of coverage they want to purchase. They believe consumers are able to choose limits in the amount they feel best for their individual circumstances.

“New York has an auto insurance market of last resort, or residual market, for those drivers who are unable to obtain coverage from any auto carrier. This market, the New York Automobile Insurance Plan (NYAIP), currently has a historically low level of motor vehicles insured by it,” Melchionni said. “This is more evidence of a robust and competitive auto insurance market in New York.”

In the DFS’ 2012 report, it was noted less than one percent of private passenger motor vehicles were insured under the NYAIP, and the number of vehicles insured under this plan had decreased by 20 percent at the end of 2012 compared with the previous year.

Gary Henning emphasized the need for Assembly “to extend the insurance rating laws, including extension of those affecting automobile insurance.” The “2% law,” which will expire this June, allows for insurers to non-renew two percent of their books of auto insurance policies in any rating territory annually. Henning said the law would provide flexibility, which ultimately creates a healthy and competitive marketplace to benefit the consumer.

“This law is critical for allowing insurers flexibility in managing their overall exposure in a territory and throughout the state. The flexibility this provides makes it more likely insurers will want to be in the New York automobile insurance market in the first place. If this law were to sunset, a policyholder would either have to break the law, fail to pay premium or be involved in numerous accidents before an insurer would be allowed to non-renew coverage for the policyholder,” Henning said.

AIA stated that too many unnecessary medical services are being provided, inflating claim costs for no-fault. The 2014 Budget had provisions in it which would have addressed the issue, but failed to make it into the final version.

“While AIA certainly understands the concerns of some of the other stakeholders regarding the breadth of these provisions, AIA believes acceptable and beneficial compromise language could have been worked out, language that would have further reduced no-fault fraud,” Henning said. “AIA was therefore extremely disappointed the medical provider decertification provisions were dropped completely from the final state budget. AIA hope that as a result of this hearing and related roundtables, the Assembly will consider supporting these reforms.”

The AIA urged the Assembly to pass A932, sponsored by Assemblyman Heastie, allowing insurers to investigate suspicious claims after the 30-day deadline, and would continue to subject any eventual payment of those claims to the 24 percent annual interest requirement.

New York is the fourth most expensive state in the nation for auto insurance premiums, and the AIA believes expanding the verbal threshold would further increase insurance costs when considering increasing legislation.

Henning closed with commenting on “the use of education and occupation as underwriting and rating tools. AIA cannot comment on the accuracy or veracity of the specifics of the recently released NYPIRG study. However, we can say generally that insurers use many underwriting and rating factors, two of which might be occupation and education, to assess risk presented by policyholders.”

“The better an insurer can define risk characteristics, developing statistically relevant data for all different types of categories, the more accurately automobile insurance can be priced,” Henning said.

Matthew Guilbault, the director of government and industry affairs for the Professional Insurance Agents of New York State, Inc. (PIANY) testified with PIA’s director of research, Dan Corbin.

Guilbault said, “much of the testimony prepared for today was the result of a member poll that PIANY set out last week. In our poll, 111 of our most active members were asked a series of questions about the automobile insurance marketplace. These members hail from all across New York State, from Buffalo to Brooklyn, and represent small, medium and large agencies.”

Referencing a February 2014 Quadrant Information Services survey, it was found for a 40-year-old single male in New York State, he will have an average premium of $1,173 with a $500 deductible on collision and comprehensive coverage. Compared to neighboring states such as New Jersey, Connecticut, and Massachusetts, our average premiums are lower.

This survey calculated rates from six different large carriers in 10 zip codes per state, asking insurance agents their take on their respective state’s rate. “I am not aware of whether the zip codes in New York were evenly spread across the state of included in the five boroughs,” said Corbin.

Speaking on the percentage of uninsured motorists in New York, Corbin spoke about a 2012 study conducted by the International Risk Management Institute. The study found the state ranks the lowest in the country at a five percent, compared to a nationwide average of 13.8 percent.

Corbin touched upon the state’s minimum limits requirements, saying “Many of our members tell PIANY that they won’t even write policies at the current minimum limits because, in their opinion, the level is ridiculously low and irresponsible. Even a young adult new to the job market with no assets should have more than $60,000 coverage for an injury and for property damage because it doesn’t take a very serious wreck to cause property damage or injuries that exceed those levels. The State of Maine’s requirement of a 50/100/25 minimum-limit policy currently sets the standards in the country.”

“PIANY supports the changes embodied in A10784/S7787 of 2012,” Corbin said. “This legislation would have required automobile insurance policies to provide supplementary uninsured/underinsured motorist coverage equal to a policy’s bodily injury liability limits, unless the higher SUM limits are affirmatively rejected by the policyholder and that rejection is appropriately memorialized.”

PIANY supports a reform of the nofault bill, calling for changes to laws and regulations to combat insurance fraud. The “necessary statutory changes” they support are:

• Requiring use of medical guidelines for specific auto-related injuries to reduce over-treatment and unnecessary procedures;

• Requiring that disputes be resolved by arbitration to speed up the resolution of claims and avoid the costs and uncertainty of a trial;

• Permit those with claims for less than $5,000 to submit proof based on a doctor’s sworn affidavit instead of requiring physicians to appear in person;

• Strengthen the penalty for acting as a runner and facilitating fraudulent transactions to a felony; • Raise the burden of proof for receipt of no-fault benefits by requiring the plaintiff to produce a witness with personal knowledge of the facts alleged in the complaint.

“Now is the time to enact comprehensive and systematic reform of the no-fault system, while preserving the benefits that justified its adoption 36 years ago- reducing costs and delays in paying claims,” said Corbin.

Jack Smith, regional director for Independent Insurance Agents & Brokers of New York (IIABNY), also testified at the hearing. The agency services more than 2,000 Personal Lines clients; about 40 percent of the client lists are personal lines clients and 60 percent are commercial clients, with the primary market area being the Hudson Valley.

“The personal auto market is extremely competitive in New York State,” Smith said. “The pricing is high, but that is driven by claims costs including higher medical costs in our State. There are an adequate number of carriers competing for auto insurance business with new entrants coming in as well, which is a plus for consumers.”

Smith says if the underlying claims cost issues are not addressed, the costs of insurance cannot be reduced. “The New York Auto Insurance Plan, the last resort market for auto insurance and generally high risk drivers, is experiencing historically low numbers because the voluntary market is adequately servicing New York’s drivers.”

Smith said, “The more heavily populated areas of the state, including New York City and Buffalo, have a higher incidence of no-fault auto fraud resulting in much higher than average premiums for consumers in those areas. Personal auto premiums in the five boroughs of New York City can be four times higher than upstate premiums because fraud drives up the cost of auto insurance. No-fault auto fraud is a serious problem in our state and one that needs to be addressed with tighter laws and higher penalties for those who engage in fraudulent activities such as fake medical claims, staged accidents and runner/steerer activity.”

Smith said IIABNY supports the nofault reforms to crack down on medical fraud that the Governor and the Senate had in their budget plans. They also support the right for consumers to be informed about auto insurance so they can make a better-informed decision on what works for them. Bills introduced in both Houses last year, S5606 and A6727, required a choice of purchasing to be offered to the consumer, and that the availability of limits be equal to the limits of the bodily injury policy.

“We regularly provide coverage options to our customers to tailor coverage to their specific needs. Offering a range of options for SUM coverage is beneficial to consumers. These bills have some procedural problems but we support the concept and are willing to work on a legislative solution that works for all parties,” concluded Smith.

President of the New York State Trial Lawyers Association (NYSTLA), Robert Danzi, and Past-President Nicholas Timko testified that “Our members represent ordinary New Yorkers as they seek to obtain justice having suffered serious injuries or deaths of family members as a result of an auto accident. They see firsthand the impact of auto accidents on families-not just the injuries but the ballooning medical bills, lost incomes and damaged lives that result.”

“Our members also see the consequences of inadequate auto insurance- without proper insurance coverage, accident victims often must rely on charity or taxpayer-funded programs to pay medical costs and to provide basic necessities for their families. Given this unique perspective, NYSTLA has a strong interest in any efforts to amend or reform the insurance law as it relates to automobile insurance.”

Danzi said, “This Committee has heard many suggestions that would limit the rights of consumers and accident victims, typically made in the name of addressing insurance and no-fault fraud to help cut rates. What they lack is hard evidence that changes to the law sought by the insurance industry that are necessary or that insurance rates are set at an appropriate level. While the Department of Financial Services receives some data used by insurers to set rates, much of that information is not available to the public, and in any case is aggregated data of limited value when considering policy changes.”

“The need for greater transparency in rate setting is well-illustrated by recent reporting by the Daily News,” said Danzi. “Residents of one South Bronx precinct pay higher insurance rates based on the area’s high crime rate. The precinct’s crime statistics include crimes committed at the Rikers Island jail, bumping the overall crime rate up to 26 percent and the violent crime rate up 49 percent. Greater transparency within the insurance industry could have helped avoid the inherent unfairness of penalizing South Bronx residents because of artificially inflated crime statistics.”

“Auto insurers are making a substantial profit in New York, as compared to other states,” Danzi continued. “In 2012, return on new worth – a key indicator of automobile insurer profitability – for private passenger automobile insurance was 7.2 percent in New York, or about twice the national average of 3.5 percent. Yet New Yorkers continue to pay some of the highest insurance rates in the country.”

“Transparency in rate setting is essential to allow the State and consumers to monitor the industry, ensure fair treatment, prevent price gouging, and assess policy proposals that would strip consumers of their rights. Assembly bill number A1132 would require that insurance companies should be required to reveal the hard data that is the basis for the rates they charge for a product that consumers are required to buy, and should be supported by this Committee,” Danzi explained.

“Too often the only available recovery after an auto accident is this minimum level of coverage carried by the driver at fault. No matter how catastrophically injured person may be from an auto accident, the most they can recover at this minimum level is $25,000, or a mere $50,00- in case of death,” said Danzi. “Raising the minimum auto insurance limits, as proposed in Assembly bill A3306, will better protect low and middle-income New Yorkers, those least able to afford the consequences of a serious accident.”

Timko said, “The legislature should also consider addressing problems caused by the Graves Amendment. This is a federal law that eliminated leasing and rental companies’ share of responsibility for accidents caused by the vehicles they own and profit from. Since the Amendment passed in August 2005 corporate rental and leasing companies are exempted for injuries to resulting from the negligent operation of their vehicle, and so rental and leasing companies have no incentive to ensure that only safe and properly insured drivers take to the roads behind the wheels of their motor vehicles.”

“The Graves Amendment provides that states can enact ‘financial responsibility’ laws that would undo some of the inequities of the federal law,” said Timko. “NYSTLA supports the Assembly bill number A3435 that would achieve his goal by requiring leasing and rental companies to obtain adequate levels of insurance for their vehicles. If leasing and rental companies are responsible for insurance coverage they will have an incentive to properly scrutinize the driving record of those leasing and renting their vehicles, helping to keep unsafe drivers off New York’s roads.”

“Legislation that would require insurers to: promote responsible insurance coverage; educate consumers; and provide consumers with the option of purchasing SUM (Assembly bill A6727) and spousal liability coverage (Assembly bill A1055) at limits equal to their liability coverage, should be a priority,” said Timko. “Twenty-six other states have already adopted similar measures with regard to SUM insurance, and states like New Jersey have made spousal liability coverage automatic.”

“Unfortunately, New York’s current law does not adequately protect policy holders from an unscrupulous insurance company that unreasonably delays or denies legitimate claims,” claimed Danzi. “If an accident victim fights back in court, the insurer need only pay what it should have paid in the first place, and no more. In the absence of any real consequences for such unfair claims practices, there is an overwhelming incentive to profit at the expense of consumers.”

“Under current law, if an accident victim has not suffered a ‘serious injury’ they are limited to receiving compensation provided by no-fault coverage,” Danzi said. “Unfortunately, he law defining ‘serious injury’ has not kept pace with modern medicine. The current law was enacted long before many medical technologies like CT scans, MRIs, EMGs and other testing could readily identify man of the serious injuries stemming from auto accidents. For example, spinal, nerve, or ligament damage, and traumatic brain injuries which could not be detected at the same time the no-fault law was crafted, might not be considered ‘serious’ under the law’s present definitions.”

“Among the many proposals aimed at tackling no-fault and insurance fraud proposed by the insurance industry, none take steps to address fraud by parties other than the consumer,” Danzi said. “For example, NYSTLA members all too often see abuse and even outright fraud in the use of no-fault medical examinations.”

The examples Danzi provided include:

• Insurers demanding unnecessary examinations;

• Examinations conducted by physicians in specialties other than those related to an accident victims injuries;

• Examinations by physicians whose principal source of business is no-fault medical examinations on behalf of insurers, who therefore lack any true independence;

• Physician fraud, including use of patterned, boilerplate and carrier-written medical report templates that can result in “canned” or wholly fictional reports.

“Of the proposals this Committee has heard today from insurers, we must take exception to those that are tailored to increase insurers’ profits, seek to avoid paying valid claims, and would further strip insurance consumers and innocent injured accident victims of their rights,” Danzi said.

“Under current law, an insurer who fails to pay an accident victim’s claim within 30 days of being provided proof of claim is precluded from denying that claim, unless the policy does not cover the individual or the particular claim,” said Danzi. “This longstanding rule is an entrenched part of the auto business in New York, and has been sanctioned by the New York Court of Appeals.”

Last to testify at the hearing was Russ Haven, Legislative Counsel for the New York Public Research Group (NYPIRG). “Periodically- particularly when the investment climate is less hospitable- insurers say that despite best efforts they are stymied by wily fraudsters and laws that shield crooked health care providers, shady lawyers, and bogus victims.”

“New York’s auto insurance companies appear to be quite healthy and profitable according to National Association of Insurance Commissioners (NAIC) data,” said Haven. “These industry claims of widespread fraud have not been subject to an independent audit nor has the extent of their fraud fighting efforts been publically examined.”

“Related to claims of out-of-control fraud, insurers also have pushed to overhaul the state’s ‘prompt payment laws,’ which could ultimately hurt policyholders, passengers, and pedestrians who could lose access to qualified providers, not receive prompt treatment, be forced to pursue payment against carriers, or be stuck with unpaid bills for care received for legitimate injuries,” Haven said.

“According to the most recent data available from NAIC, for 2012 New York auto liability insurance was more profitable than the national average. The NAIC 2012 profitability report slates that $10.7 billion in auto premiums were collected from New York private passenger policyholders in that year. Liability losses incurred were at 60.5 cents per premium dollar. The national average was 67.6,” Haven explained.

“The 2012 Superstorm Sandy led to significant payouts for physical coverage, liability- the portion of the premium that includes no-fault and is purportedly targeted by fraudulent billing schemes, which really is the focus of the current debateappears quite stable in New York,” said Haven.

“The way the insurance industry has framed the auto insurance fraud issue, it is largely a problem of staged accident rings working with bogus medical providers who are certified to bill under the state’s no-fault system. If you remove the so-called ‘medical mills’ from the equation, the scheme cannot function,” Haven said. “The legal authority to bill under the no-fault thus appears to be the linchpin in the auto fraud playbook. Get rid of the bad apple providers and the lion’s share of the fraud problem will go away.”

“Unless this law is fundamentally and fatally flawed, we [NYPIRG] believe the Cuomo administration should use the current law to carry out its intended purpose and report back to the Legislature with any recommendations or strengthening the law,” said Haven. “If fraud is central to the insurance industry’s argument that current laws need to be changed, this needs to be documented in detail.”

“Notwithstanding NYC Comptroller Bill Thompson’s Report, in 2008, the state enacted file and use ‘flex rating’ for no-fault, something the industry had long sought and consumer advocates long opposed,” Haven said. “The evidence from New York’s previous experiment with flex rating for auto insurance was that consumers did not benefit from rate reductions.”

The “file and use” system for health care was repealed by the state in 2010, as it had not produced lower premiums; the law requires health care insurers to pay $.82 for each premium dollar.

“Senate Insurance Chair Neil Breslin (D-Albany) said, ‘It makes them go to the Insurance Department to get approval for rates, as opposed to just filing a rate with the Insurance Department. And unfortunately, sometimes, the insurance companies have shown that they raise them a lot more if they’re left to their own devices,’” said Haven.

“Assembly Majority Leader Joseph Morelle (D- Rochester) supported the repeal of automatic insurance rate increases for health insurers in an essay for Rochester’s Democrat & Chronicle newspaper dated February 7, 2010. ‘In the years since deregulation prevented the New York State Insurance Department from reviewing proposed premium hikes- a process known as ‘prior approval’- rates have risen 81 percent, outstripping inflation and increases in real wages.’”

“We [NYPIRG] believe the arguments made by the Chairs at the time, Senator Breslin and Majority Leader Morelle in favor of reinstatement of proper approval for health care insurance rate hikes applies with equal force to mandatory auto insurance coverage and that the state should repeal file and use ‘flex rating’ for auto insurance,” Haven said.

“Pursuant to Insurance Law section 9910, New York auto policyholders pay $10 per annual policy and collectively some $115 million a year for a ‘Motor Vehicle Law Enforcement Fee.’ The insurers turn the money over to the Department of Financial Services,” said Haven. “Only the first $4.7 million of these funds goes to the Department of Criminal Justice Services for local auto theft and insurance fraud prevention. According to the Division of Budget, the rest of the monies go to State Police costs, including fraud prevention.”

NYPIRG recommends reforms to:

• Create an Office of Public Insurance Counsel to act as an independent advocate for consumer and small business policyholders. “We have projected in the past that such an office could save New York consumers at least $650 million a year.”

• Level the playing field between insurers and consumers through a fair claims settlement law. Current New York law only requires insurers to pay what they would have been required to at the beginning of the process- this there’s typically no financial penalty for these tactics. Other states, such as California, give policyholders a private right of action and allow them to recover fully when insurers unreasonably withhold payment for valid claims.

• Require DFS to let New York driver’s comparison shop online for auto insurance by establishing a DFS webpage allowing them to compare prices among carriers providing a requested coverage in their area. Provide DFS carrier complaint data as well as information on the financial health of the insurer.

• Return New York to a prior approval system and repeal flex rating.

• Reform Regulation 68 to increase the amount of time injured drivers; passengers and pedestrians can file legitimate claims for medical care.

• Protect consumers that purchase comprehensive and collision coverage by requiring insurers to provide prompt information on what the insurer would pay them if their car was declared a total loss and what sources are used to determine value, so the insured could gauge whether continuing these types of coverage is in their best interests.

• Ensure that the Motor Vehicle Law Enforcement Fee funds fraud prevention and other policyholder protection and otherwise unfunded driver safety activities or eliminate this cost.

“The hearing touched on a number of highs and lows of the automobile insurance market in the State of New York. It was uncovered that statistics surrounding rates and accidents are collected and analyzed so differently by various stakeholders that there is a need for the standardization of data. The need for greater independent consumer protections was also readily apparent,” said Cahill. “Most surprising was the lack of actual data on the impact fraud and waste have on rates. While no fraud should be tolerated, the question remains as to how much due process consumers should be denied. I look forward to addressing head-on the primary reasons for high rates to best help those in New York struggling to pay for car insurance.”

“I am pleased that the Assembly Insurance Committee is having this hearing,” said Assemblyman Will Barclay (R – Pulaski) , Ranking Minority Member of the Assembly Insurance Committee. “Auto insurance rates have been rising in New York State. After hearing detailed testimony from the Department of Financial Services, industry experts, consumer groups and other stakeholders, I look forward to working with Chairman Cahill and my colleagues on the Insurance Committee to develop legislation that will effectuate affordable auto insurance.”

“I am particularly interested in why people with health insurance need to duplicate that coverage in their auto policy and in how both insurers and consumers may work together to best handle small property damage claims in this State,” said Assemblymember Phil Steck (D – Colonie, Schenectady). “Due to the high cost of repair, almost any claim today will exceed the standard $500 deductible.”

“The mere fact that New Yorkers endure some of the highest insurance rates in the nation is without a doubt troubling, however a recent report by NYPIRG shows that’s far from the only reason to be upset with insurance rates in the state. NYPIRG’s report shows that some of the state’s largest insurers are preying upon motorists who have less education, and work in non-professional jobs. The legislature must step in and right this wrong, by swiftly enacting changes to these unsettling, and unfair rate-setting practices in our state,” said Assemblymember N. Nick Perry (D – Kings County).

“This hearing will prove to be a critical step in ensuring that auto insurance will be affordable for New Yorkers. It is important that we in the legislature work to reduce financial hardship, while keeping drivers safe,” said Assemblymember David Weprin (D – Fresh Meadows), who was unable to attend but had a staff representative present.

“I would like to thank Chairman Kevin Cahill and ranking member Will Barclay for leading the most important Insurance Committee hearing. It is imperative that we enact the legislation necessary to keep insurance rates affordable for New Yorkers. Curbing the proliferation of fraudulent, no-fault claims will allow insurance companies to pass along cost savings to motorists,” said Assemblymember Gary Finch (R – Auburn)

“We are pleased to participate in this important hearing,” said Robert Danzi, Esq., President of the New York State Trial Lawyers Association. “Assemblymember Cahill is focusing on the right questions – how do we maintain the rights of consumers while keeping auto insurance affordable.”

“We thank Chairman Cahill and the members of the Committee for providing the Department of Financial Services with the opportunity to participate in this hearing. We look forward to working with them on a number of critical issues moving forward, including rooting out no-fault fraud, better protecting consumers, and helping make sure auto insurance is affordable for New Yorkers,” said Benjamin Lawsky, Superintendent of the Department of Financial Services.

Assemblymember Cahill and the Insurance Committee will be hosting regionalized round tables across the state in order to focus on localized issues pertaining to the high cost and other issues surrounding car insurance.