New York Gov. Kathy Hochul\u2019s proposal to cut auto insurance rates and make the state more affordable starts from a simple premise: If fraud and legal abuse are driving costs, the incentives need to change.<\/p>\n
New Yorkers pay among the highest<\/a> auto insurance premiums in the country. That\u2019s not because they\u2019re worse drivers. It\u2019s because New York has built a system where fraud and lawsuit abuse are profitable, and the costs are passed directly to everyday drivers.<\/p>\n Staged accidents, copy-paste medical billing, and high-volume litigation aren\u2019t isolated incidents. They are predictable outcomes of rules that pressure insurers to pay before fraud can be investigated and allow vague injury standards to turn minor claims into lawsuits.<\/p>\n In 2023 alone, insurers reported<\/a> more than 38,000 suspected auto insurance fraud incidents in New York to the state\u2019s Insurance Frauds Bureau, the highest total on record. Staged crashes increase<\/a> premiums by hundreds of dollars a year, according to the Insurance Information Institute.<\/p>\n Based on my over 30 years of experience as a defense lawyer for businesses, municipalities, and insurers, this system survives because I believe a powerful trial-lawyer ecosystem benefits from it, not everyday drivers. <\/p>\n When cases are cheap to file, hard to dismiss early, and expensive to defend, volume becomes the business model, and premiums keep rising.<\/p>\n Hochul\u2019s Proposal<\/p>\n Modern insurance fraud isn\u2019t just opportunistic. It\u2019s coordinated. Hochul (D) wants to strengthen interagency enforcement and expands criminal tools so regulators and prosecutors can pursue organizers, recruiters, and complicit medical providers, not just individual drivers.<\/p>\n That matters because fraud rings depend on scale and repeatability. When enforcement targets the entire operation rather than the final transaction, the economics stop working.<\/p>\n A defining feature of no-fault fraud is volume billing built on boilerplate documentation \u2014 identical diagnoses, repetitive treatment schedules, and paperwork designed to meet deadlines rather than reflect real injuries.<\/p>\n Long Island has become a cautionary example. In one case, an orthopedic surgeon in Deer Park allegedly<\/a> copied and pasted dozens of operative reports verbatim over a four-year period for patients injured in accidents, with those duplicate reports then used in litigation and insurance claims.<\/p>\n Hochul\u2019s proposal gives insurers more time to identify and substantiate fraud while preserving protections for legitimate claims. That recalibration undercuts the \u2018pay first, investigate later\u2019 dynamic that makes copy-paste billing profitable in the first place.<\/p>\n When insurers can investigate patterns instead of racing the clock, fraudulent providers lose their leverage and their business model.<\/p>\n No-Fault System<\/p>\n New York\u2019s no-fault system was designed to keep minor injuries out of court, but its \u201cserious injury\u201d threshold has long been criticized<\/a> as vague and inconsistently applied, allowing many marginal claims to proceed as full-blown lawsuits.<\/p>\n When cases are cheap to file, difficult to dismiss early, and expensive to defend, the rational response is volume, a dynamic that has helped turn auto litigation into an immensely profitable business model rather than a backstop for serious harm.<\/p>\n Hochul\u2019s proposal would tighten that standard using objective medical criteria and limit non-economic damages for drivers who were primarily at fault or engaged in unlawful conduct at the time of a crash.<\/p>\n These changes don\u2019t restrict access to justice; they reduce the expected value of weak or manufactured cases that have sustained a high-volume litigation industry.<\/p>\n The trial lawyers\u2019 opposition<\/a> to these reforms is instructive. Changes that merely streamline insurance procedures rarely provoke opposition, but measures that threaten the profitability of marginal lawsuits always do.<\/p>\n Other States<\/p>\n Some high-cost states have already acted. Michigan<\/a> restructured its no-fault system to address runaway claim costs, and insurance premiums are down 18.8%.<\/p>\n Florida<\/a> and Georgia<\/a> enacted litigation reforms aimed at curbing claim abuse and excessive lawsuits, and insurance premiums are plummeting in their states.<\/p>\n Markets differ, but the lesson is consistent: When fraud and legal abuse become less profitable, they decline\u2014and pricing stabilizes. Hochul\u2019s plan applies that same logic to New York\u2019s uniquely expensive system.<\/p>\n The Bottom Line<\/p>\n Auto insurance is expensive in New York not because drivers are uniquely risky, but because fraud and abuse has been allowed to flourish, resulting in higher prices for New Yorkers.<\/p>\n Hochul\u2019s proposal tackles those problems at their source. By changing the incentives that sustain staged-accident rings, medical mills, and high-volume litigation, it would reduce fraudulent claims, shrink unnecessary lawsuits, and put sustained downward pressure on premiums.<\/p>\n High insurance costs aren\u2019t inevitable. They are the result of policy choices. The governor\u2019s plan is the right one to bring those costs down.<\/p>\n This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.<\/p>\n Author Information<\/p>\n