NY| Insurance Circular Letter No. 3 (2026) from the New York State Department of Financial Services advises all motor vehicle insurers that recent statutory changes in Insurance Law, Penal Law, and CPLR are intended to reduce fraudulent and abusive claims and require prior approval for nonbusiness motor vehicle rate increases. Key reforms include expanding the definition of a “fraudulent insurance act” to cover individuals who arrange staged accidents, revising the “serious injury” definition by removing the 90/180-day non‑permanent injury prong, sequencing findings so fault and serious injury must be determined before non‑economic damages, imposing a $100,000 cap on non‑economic damages for certain at‑fault drivers (uninsured, impaired, or committing a felony), and adopting modified comparative negligence so a claimant’s recovery is barred when their culpable conduct exceeds that of defendants. The letter also tightens flex‑rating by prohibiting overall average rate level increases of up to 5% for nonbusiness motor vehicle insurance without the Superintendent’s prior approval beginning November 27, 2026, and provides for repeal of Insurance Law § 2350 in 2030, after which all nonbusiness motor vehicle rate filings will require prior approval.
DFS expects insurers, the New York Automobile Insurance Plan, and rate service organizations to reflect anticipated savings from these reforms in all pending and future rate filings by revising pricing models and actuarial assumptions. Addressees must amend all motor vehicle rate filings pending as of August 31, 2026 to include the new Exhibit TR‑1 Automobile Tort Reform Calculation in the updated Rate Filing Sequence Checklist and SERFF, quantifying the projected percentage decrease in claims and loss adjustment expenses attributable to Parts F and EE and providing detailed support for the calculations, methodologies, and assumptions used. DFS emphasizes that these reforms should moderate claim frequency and severity and lower loss adjustment expenses, and it directs questions about the Circular Letter to a dedicated autoreform@dfs.ny.gov email address.