Kathryn Wylde, president and CEO of the Partnership for New York City, sat down for a fireside chat at City & State’s recent New York’s Car Insurance Affordability Crisis event, presented in partnership with Citizens for Affordable Rates, which gathered industry experts and governmental officials for a day of robust discussions on how to lower the costs of auto insurance for New Yorkers.

Wylde offered highlights from a new study released by the Partnership for New York City, “Excessive Litigation Is Driving New York’s Affordability Crisis,” and her insights on why insurance costs have risen, and what can be done to lower them. The Oct. 29 discussion was held before attendees at the Museum of Jewish Heritage in lower Manhattan. This interview has been edited for lengthy and clarity.

I’d like to ask you about a report released in September by the Partnership for New York City, “Excessive Litigation Is Driving New York’s Affordability Crisis.” Can you talk about the report and its findings?

We took a granular look at what are the sources of our high costs and what we were shocked to learn – not being fans of raising everybody’s taxes in the highest tax state in the country – as we started to explore that, we found that insurance just leaps out (at) you. And not just the cost of insurance, but more importantly, the cost of litigation in New York is just way outside the box.

Overall in New York state, our insurance costs across the board are 15% higher than the country, but when it comes to auto insurance, we’re 52% higher than the country. This isn’t a small number, and I happen to live in Brooklyn, where our comprehensive car insurance coverage is $6,700 a year, which is by far the highest of any place in the rest of the state or the country. So I have a personal interest in this as well.

There have been difficult rate increases for auto coverage in New York and across the country in the past few years. This is a national issue. What’s driving these significant increases?

Nationally, one thing is severe weather events, which I hadn’t really thought about. … Storms, floods, etc., vehicles go floating down the street. … That is one area that contributes to the cost, but it’s not the biggest one.

The second area is the increased cost of labor associated with maintenance and repair. Part of that is because we now have cars that are very difficult to understand, because they’re all technology, and so that requires a whole different level of training and complications, as many of you who have a new car know – I bought one last weekend, and I can’t understand it.

The other thing is fraud, staged accidents, etc., which are huge. The Department of Financial Services, I asked them for some statistics, and they indicated that of their medical health fraud claims, 90-plus percent of them are due to “no-fault insurance cases.” And 75% of all their fraud claims – not just fraud and not just health, but all their fraud claims – 75% are due to that one law, the no-fault car insurance law. Last year, the number of fraud claims through the no-fault car insurance law were 38,000, up from 19,000 two years before that. This is not small potatoes.

In terms of the size of nuclear jury awards – New York was No. 2 to Florida. Florida reformed their car insurance tort, and now New York is No. 1 in terms of the size of claims. Claims and jury awards over $10 million are referred to in the industry as nuclear awards, and New York is No. 1 in the country on that front too. So those are the causes of the high cost.

Can you walk us through no-fault insurance, and what kind of reforms Florida engaged that we could apply here?

So what Florida did in 2023 was they capped jury awards, they capped medical costs. When you get a bill from the insurance company, you’ll see that from your health insurance, there’ll be a very large number of the charge, and then there’ll be a much smaller number of what the insurance company is paying the provider, or these are the bills from the hospitals, or the dentist, whatever, very large charge. It’s a much smaller number the insurers pay, and then a small number of that is your deductible if you have health insurance.

I never knew what that big number was for. Well, apparently it’s for when you go to litigation, you present a very large number. It’s not what you actually pay, but it’s what you seek to recover. Florida fixed that so there are a number of things that they did. They eliminated no-fault and said fault will be attributable based on your responsibility for the accident. And as a result, in Florida, in one year since they made this change, their insurance premiums have gone down 6% to 10% and one of their five top insurance companies – it was announced last week by Gov. (Ron) DeSantis, and I never thought I’d be quoting him – that the biggest insurance company in car insurance down there is rebating $1 billion, and the other four big insurance companies are going to follow for their customers, because their costs are so much lower under those reforms.

It’s been enormously effective in one year. Michigan reformed their laws four years ago. They had exactly the same experience, even more dramatically for those reforms.

Addressing auto insurance rates requires action from industry and all levels of government. For example, we can reduce losses through improved traffic and road safety and infrastructure investments. And that includes action to address climate change and frequent storms, hail and other weather events. How do all these events significantly impact auto insurance losses?

Well, according to the head of one of our large auto insurers, rates are going to go up next year by another 9%. So we’re not doing anything at the moment that’s solving the problem – again. A question for the legislators that are coming in: This is an opportunity, and this is certainly not the only area. If you look at your energy bill, you’ll see those costs are going up dramatically. But if you look at, for example, the cost of construction in New York, one of the key things we talk about is the cost of housing construction, and it’s almost $1 million to build an apartment in New York, which is just off the charts, because who can afford that? … The fact is that market rents today average over $3,500 a month. … And to afford that, a family has to earn $141,000 a year. Eighty-two percent of New York City residents earn less than that and are priced out of our housing market. Eighty-two percent. It is no surprise that this issue became the No. 1 issue in this mayoral election.

The other thing we could do is reduce the statute of limitations. Currently, it’s three years on car insurance in New York. Florida, made it two years. In Michigan, it’s two years. And that made a big difference.