New York Tackles Auto Insurance Fraud and Legal System Abuse

• By: Wes Bissett
• June 4, 2026

Last week, New York Gov. Kathy Hochul signed into law a comprehensive series of auto insurance measures that are arguably the most significant legal reforms and anti-fraud initiatives to be implemented by any state in over a year. 

New York’s auto insurance marketplace has been in a state of crisis for more than two decades, and the environment has only worsened in recent years. Pervasive fraud and excessive and frivolous litigation initiated by a combination of bad actors and self-serving billboard attorneys have created conditions that needlessly make the state’s auto insurance rates among the highest in the country. 

The bills signed into law last week address some of the core factors that have driven exorbitant auto insurance premiums in New York and should reduce claim and settlement costs to more appropriate, reasonable levels. The measures include provisions that:

• Tighten the “serious injury” test that determines whether a person involved in a motor vehicle accident may seek damages for pain and suffering or emotional distress.

• Limit pain and suffering awards that may be recovered by bad actors by capping non-economic damages at $100,000 for drivers who are uninsured, intoxicated, or engaged in the commission of a felony at the time of the accident.

• Revise comparative negligence standards to bar the recovery of non-economic damages by any driver who is more at fault for an accident than an individual defendant or group of defendants.

• Establish criminal penalties for any person who “hires, requests, encourages, orchestrates, or invites another individual to stage a motor vehicle accident” and make such fraudsters financially responsible for the full amount of any loss suffered by a victim. 

Many observers in New York mistakenly believed reform of this nature was unachievable. The passage of legal reform is never simple or easy in the best of circumstances, and conventional wisdom in New York suggested that, despite the severity of the auto insurance crisis, the defenders of unscrupulous attorneys could beat back legislative challenges to the status quo. 

Last week, the naysayers were proven incorrect. The passage of these meaningful reforms is due in large part to the multi-year and persistent advocacy efforts of Big I New York, which shone a spotlight on the legal abuse and systemic fraud driving auto insurance premiums higher, identified the reforms that would address these root causes of spiking rates, made these problems the center of its lobbying agenda, and partnered with like-minded stakeholders. 

Other factors also played a significant role in getting these measures over the finish line. Significantly, Gov. Hochul made these reforms a top priority. She incorporated them into her affordability agenda, championed them before legislators and the public, and invested a tremendous amount of political capital in securing their enactment. The reforms signed into law last week simply would not have been passed without the governor’s backing. 

New York is the latest state to join the roster of jurisdictions that have enacted high-profile civil justice reforms. Florida, Georgia and Louisiana have implemented analogous robust legal reform laws in recent years, and those actions are already producing beneficial results for insurance consumers and their marketplaces.

In Florida, for example, auto insurers have recently filed dozens of auto insurance rate decreases with regulators, and the top five carriers in the state’s auto market have already indicated an average rate reduction of 8% in 2026. 

New Yorkers anticipate similar beneficial outcomes once the newly implemented reforms take hold. In a statement issued last week, David H. Borg, Big I New York Board chair, noted that, “as the costs associated with fraud and excessive litigation decline, these changes will help stabilize premiums, encourage greater insurer participation in the marketplace, and foster increased competition that will ultimately benefit consumers.” 

A little over a year ago, the Big “I” highlighted the passage of important legal reforms in Georgia, expressing hope that other states would follow Georgia’s lead and noting that “the actions of Gov. Kemp, the Georgia General Assembly, and their supporters in the private sector offer proof that commonsense, reasonable, and effective reforms can indeed be implemented.”

New York is the most recent state to take such action, and all signs indicate that it will not be the last.

The actions taken by Gov. Hochul and the New York State Legislature now offer proof that such legal reforms and anti-fraud legislation can be embraced by thoughtful leaders from any political perspective and enacted anywhere. 

Wes Bissett is Big “I” senior counsel of government affairs.