Live Insurance News: Is It Time to Scrap No-Fault Insurance in New York?
By: H. Cutner
New York drivers pay a lot for car insurance. A staggering 52% more than the national average, in fact. Why? And what can be done about it? These were the big questions at a recent event hosted by City & State New York. We’re diving into their coverage to see what policymakers, industry experts, and advocates had to say. The answers might surprise you.
A Problem Everyone’s Talking About
Let’s be real. The cost of living in New York is the number one issue for almost everyone. It’s not just rent and groceries. It’s the cost of getting around. For many, that means driving. And driving means insurance.
Kathy Wylde, a keynote speaker from the Partnership for New York City, didn’t pull any punches. She pointed out that the go-to solution in New York seems to be throwing more public money at problems. But does that really fix anything? Or does it just paper over the cracks?
The Elephant in the Room: Lawsuits and Fraud
Here’s a shocking number. New York pays 15% more on litigation fees compared to other states. That’s a lot. But it gets worse. From 2014-2024, the cost of litigation shot up 57%.
Why the massive jump? Wylde pointed to third-party litigation funding. Private equity funds are bankrolling lawsuits and taking a cut of the settlement. Everyone pays for this. In higher premiums.
Then there’s New York’s “no-fault” law. It’s supposed to make things simple. Get in an accident, and your own insurance pays up to $50,000, no matter who’s at fault. But it’s become a magnet for fraud. Over 90% of medical health fraud claims received by the Department of Financial Services are related to no-fault cases. Think about that. Rings of shady law firms and doctors showing up on the same accident reports over and over. It’s a system ripe for abuse.
Is There a Better Way?
So, are we stuck? Not according to Wylde. She pointed to other states for answers.
Take Florida. They got rid of their no-fault system. They capped jury awards and medical costs. The result? Insurance premiums dropped 6-10% in just one year. Michigan did something similar and saw costs go down. They required proof of “observable injuries”—not just someone saying “my back hurts.”
Plenty of recipes for success out there.
More Than Just Insurance
The discussion wasn’t just about premiums. It covered the whole transportation ecosystem.
Transit Deserts: State Senator James Skoufis brought up a huge point. For people outside the five boroughs, public transit can be a joke. He mentioned a six-hour window with zero trains out of Orange County. So, forcing people to pay congestion pricing without giving them a real alternative? “We did this backwards in New York state,” he said. Build the transit first.
Costly Parts: Assembly Member David Weprin noted that federal tariffs are driving up the cost of car parts. That cost gets passed on to insurance companies, and then to you.
“Schemers” and Staged Accidents: Weprin, who sponsored Alice’s Law to make staging accidents a felony, said it’s a major driver of costs. It’s not just a few bad apples; it’s organized fraud.
The Future is… Autonomous?
Could self-driving cars be a solution? Brianna January from the Chamber of Progress thinks so. A driverless car doesn’t drink and drive. It doesn’t text. It doesn’t get drowsy. Fewer human errors mean fewer accidents.
But panelists pushed back. What about the thousands of taxi drivers who could lose their jobs? It’s a complicated issue with no easy answers.
What’s Next?
The event made one thing clear: tackling New York’s car insurance crisis requires real guts. It means challenging special interests and looking at what’s truly driving up costs. For consumers, it means shopping around for policies and being aware of the forces at play. For agents, it means navigating a complex market while advocating for sensible reforms.
It’s about more than just a monthly bill. It’s about making New York affordable for everyone. The conversation has started. Now, who’s ready to act?
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