ALBANY — Gov. Hochul’s win on auto insurance rates is a disaster for crash victims and their loved ones — and it’s not even clear if car drivers will get the “affordability” that the governor promised and promised and promised.
It was an Albany drama that played out as an epic five-act tragedy: Hochul’s “State of the State” address on Jan. 13 included a long section, “Cutting Auto Insurance Costs,” that pushed her chips to the center of the table: she would reduce New York State’s supposedly high car insurance rates by reducing some victims’ compensation, juggling some liability rules that have been on the books for decades and, vaguely, cutting down on “fraud.”
In doing so, she was following a playbook drafted by Uber, with the tech company launching an $8-million-plus lobbying effort that featured actors who were paid to praise the plan.
Within days of Hochul’s speech, victims advocates, trial lawyers and plenty of state legislators were rallying against the proposal. Journalists got into the fray, too: The notion of fraud was debunked, disputed and debunked again. The specter of victims being left holding the bag appearing around every corner.
But here’s what happened: Hochul got almost everything she wanted on car insurance. What didn’t she get? She failed to change “joint and several liability,” a critical feature of state law that allows victims to be fully compensated, even if the party most responsible for the crash can’t pay the jury-awarded damages. In such instances, another party, even one with far less than 50 percent responsibility for the crash, pays out the remainder.
Hochul wanted to change that, so a less-responsible party doesn’t end up holding the bag. And she had the support of the MTA, which argued that under the current law, it ends up paying “jackpot payouts” because lawyers target the agency knowing that even if it was, say, 8 percent responsible for a crash, it could be held liable for the entire payout.
But lawmakers weren’t having it: “Joint and several” exists explicitly to make sure someone pays the victim the full amount awarded by a jury — indeed, the victim shouldn’t have to pay for injuries that he or she had nothing to do with. And the MTA’s argument for changing “joint and several” liability was also partly debunked.
So with “joint and several” off the table, Hochul pushed, and got, what she wanted all along: changes to insurance law that make it harder for some crash victims to seek compensation.
That includes narrowing the state’s definition of “serious injury,” which entitles victims to seek damages for pain and suffering beyond the paltry $50,000 automatically covered by no-fault insurance (a limit that hasn’t been raised since the 1970s, so if it had kept up with inflation, should be more like $329,000).
Currently, the term “serious injury” includes fractures, permanent loss of an organ or member, loss of a fetus, or a medically determined non-permanent injury that keeps one out of work or struggling to go through their day-to-day lives for more than 90 days.
Hochul’s plan would disqualify people in that last category — which would have a dramatic effect on crash victims with traumatic brain injuries or soft tissue injuries because they don’t neatly fit the remaining definitions, according to the New York State Trial Lawyers Association.
She also succeeded in changing the system so that drivers who are found at least 51 percent responsible for a crash get no compensation at all beyond automatic no-fault insurance.
The final deal includes some other things that lawmakers demanded: Insurance companies will no longer be able to set rates based on seemingly irrelevant factors such as if a driver is a renter or a home owner, occupation, education level or ZIP code, according to the governor’s office. For lawmakers with districts that have a high density of people of color, or with a high baseline cost of living, effectively all of New York City, Long Island and the lower Hudson Valley, the change was huge. And insurance companies will no longer get to raise rates by 5 percent automatically (not that Big Insurance is struggling — in 2024, before “affordability” became a national buzzword, Hochul raised premiums 21 percent.)
How we got here
In New York, the governor simply has a lot of power over the budget process. As Assembly Speaker Carl Heastie has put it, Hochul is very good at using the “tools in her toolshed.” And she has many (looking at you, Silver v. Pataki). The biggest tool is the executive budget, where governors can jam in as many non-fiscal policies as they wish.
So if Hochul wanted to change insurance law at the behest of her contributors at Uber, some changes were indeed going to happen. The question was simply how many and what kind. That isn’t news in Albany, but her process did ruffle feathers.
For instance, the budget was due on April 1, meaning that lawmakers are entering their sixth week without pay. They don’t like that.
Second, the debate over insurance that has been raging since January is part of a much larger budget negotiation, which also included Hochul’s attempt to rewrite the climate law (to the horror of lawmakers and advocates), her refusal to entertain meaningful tax increases on New York’s wealthiest and her failure to go as far as many hoped she would to limit ICE’s damage to New York’s immigrant community.
And she also angered lawmakers by withholding information that would back up her claims that her plan on insurance would save money, like the endemic fraud that is supposedly driving up costs for insurers, which are being passed on to consumers, how precisely crash victims wouldn’t be deprived of rights and how these savings she’s chasing would actually come to bear as insurance companies made no promises.
Her public campaign for her insurance proposal was nearly unprecedented. As Streetsblog reported, Hochul’s backers spent outsized resources to promote the push. And her propaganda on state media often played fast and loose with the truth.
She always denied that she was pushing this agenda on behalf of Uber, but shortly after making the proposal, her press officer actually forwarded Uber’s talking points to Streetsblog in defense of her proposals.
In the end, the governor’s victory came through a war of attrition.
“We frustratingly did not receive all the information we would have liked to evaluate this properly, and it became just more positional negotiation,” said state Senate Deputy Majority Leader Mike Gianaris, referring to all the other topics on the agenda. “And we ended up knocking out one of her big ideas [joint and several], and the other ones stayed in.”
Heastie was happy that lawmakers managed to add some limits on the data that insurance companies use to set rates for New York policyholders and also rolled back the automatic rate increases up to 5 percent that insurance companies currently enjoy. (Heastie, who always says he doesn’t want to put policy matters in the budget, really didn’t like this year’s process, telling reporters, “I’m never doing this again,” as you can see below.)
The fallout
Missed paychecks aside, the governor’s style is getting old in the state Legislature.
She dragged out the process, but also dragged through the mud the New York State Trial Lawyers Association, with which lawmakers have very cozy relations. She called the group — which defends the rights of victims — a “special interest” that wheels and deals in Albany’s back rooms. Yes, lawyers are influential in the state Capitol — their lead lobbyist, Patrick Jenkins, is a close friend of Heastie — but if Hochul had achieved all the changes she sought, lawyers would simply not take certain cases anymore, which would certainly cause incalculable suffering for some victims of car crashes.
“Uber and Big Insurance waged the most expensive legislative attack in New York history, attempting to strip key protections through a budget deal that bypassed the normal legislative process and public scrutiny,” Andrew Finkelstein, president of the New York State Trial Lawyers Association, said in a statement. “We are deeply troubled by the rollback of pure comparative negligence, which blames New Yorkers for injuries that would never have occurred, but for the negligence of others.”
Hochul’s attacks on trial lawyers (even as Uber spent millions propping up her policies) weren’t even necessary given that it’s so difficult to push back on a narrative that claims the mantle of “affordability.”
“Everybody, the legislature and even those special interests, understood that they were in a deep disadvantage in terms of messaging,” said political strategist Morgan Hook. “You’re going to argue against ‘affordability’ on energy prices, you’re gonna argue against ‘affordability’ of car insurance? There was no winning message to counter it.”
And money talks. Uber spent more than $8 million on ads and lobbying — Gianaris quipped that whatever the tech company spent is nothing: “They probably think they can save more than $8 million,” via the rollbacks on crash victims’ rights, he said.
The company acknowledged its victory in a message to customers. “This win for affordability wouldn’t have been possible without the thousands of riders and drivers across the state who spoke up,” the company said.
Emboldened by their success at the state level, Uber is looking to put pressure on Congress to approve legislation that would let companies like itself off the hook when their drivers sexually assault or injure passengers.
“Congress is considering a critical reform that will rein in lawsuit abuse and help keep rideshare affordable,” their message continued. “Please take a moment today: Email your federal representative and ask them to support vicarious liability reform for rideshare.”
At the end of the day, New Yorkers got taken for a bath. Would-be tort reformers like the Uber-backed Citizens For Affordable Rates or the Lawsuit Reform Alliance can win short-term savings, but then cite it as proof that rolling back victims’ rights is for the greater good, but in the end, it isn’t.
“I’ve watched this play out so many times over the almost three decades that I’ve been doing insurance, and we never see meaningful rate relief. We do see profit increases. We do see harder times for consumers when they need a claim to get paid, but we don’t see rate relief,” said Doug Heller, the Consumer Federation of America’s director of insurance. “The insurance companies use tort reform as a way to distract from the regulatory weakness that allowed skyrocketing prices in the first place.”
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.