On July 1, 2026, the New York Department of Financial Services (the NYDFS) published Insurance Circular Letter No. 3 (the Letter) regarding “2026 Motor Vehicle Insurance Reforms.” The Letter, addressed to “All Insurers Authorized to Write Motor Vehicle Insurance in New York State, the New York Automobile Insurance Plan, and Rate Service Organizations” concerns changes to the New York Insurance Law, Penal Law, and Civil Practice Law and Rules (the CPLR) relating to motor vehicle insurance as a result of Chapters 55 and 58 of the Laws of 2026 being signed into law on May 27 and May 26, 2026, respectively. The overarching purpose of the amendments was to “address drivers of rising costs affecting motor vehicle insurance premiums, including fraudulent and abusive claims practices, and to ensure that insurers obtain prior approval before increasing motor vehicle insurance rates.”
- Expanded Definition of Fraudulent Act
Part F of Chapter 55 amends Penal Law § 176.05, expanding the definition of “fraudulent insurance act” to include “a person who hires, requests, encourages, orchestrates, or invites another individual to stage a motor vehicle accident.”
- Flex Rating for Nonbusiness Motor Vehicle Insurance
Part II of Chapter 55 amends Insurance Law § 2350 to prohibit insurers from increasing their average rate level by more than 5% without prior approval of the Superintendent. Part II takes effect on November 27, 2026. Rate filings submitted prior to this date are still subject to the prior rate increase provisions. Part II also states that Insurance Law § 2350 will be repealed on May 27, 2030, at which point “all nonbusiness motor vehicle rate filings will be subject to the Superintendent’s prior approval.” The NYDFS states that this amendment “will require insurers to file all nonbusiness motor vehicle rate filing increases for the Superintendent’s prior approval” and that it thus, “expects Addressees to evaluate and appropriately reflect the projected savings or reductions in claim frequency, claim severity, loss adjustment expenses, and any other actuarially indicated reductions, due to the effects of the amendments made by Parts F and EE, in all pending and future motor vehicle rate filings (including filings subject to flex rating under Insurance Law § 2350) submitted to the NYDFS consistent with Insurance Law §§ 2304(b) and 2305(c).”
The NYDFS has also updated its Rate Filing Sequence Checklist and other instructions by incorporating the new Exhibit TR-1 Automobile Sequence Checklist, which is required for pending and future motor vehicle rate filings. These changes have additionally been incorporated into the NAIC’s SERFF system. The NYDFS requires insurers to amend any pending motor vehicle rate filings to include the information required by the new Exhibit TR-1 Automobile Sequence Checklist by August 31, 2026. The Letter, in conclusion, requires insurers to “review and update their pricing models to align with the reforms described in this Circular Letter” and “reflect expected savings in all pending and future motor vehicle insurance rate filings submissions, including the completion of new Exhibit TR-1 Automobile Tort Reform Calculation.”
- Serious Injury and Non-Economic Damage Amendments
Part EE of Chapter 58 amends Insurance Law §§ 5102(d) and 5104 and CPLR § 1411. Part EE amends the definition of “serious injury” under Insurance Law § 5102(d) to “delete the part of the definition that referenced a medically determined injury or impairment of a non-permanent nature that prevents the injured person from performing substantially all of the material acts that constitute such person’s usual and customary daily activities for not less than 90 days during the 180 days immediately following the occurrence of the injury or impairment.”
Further, Part EE amends Insurance Law § 5104(a) such that “in any action to recover damages for non-economic loss pursuant to Insurance Law Article 51, liability for non-economic loss cannot be fixed unless and until the trier of fact has determined the existence of a serious injury. The trier of fact must first determine the party or parties at fault before determining whether an injury is a serious injury.”
Moreover, Part EE created Insurance Law § 5104(d) to “impose a $100,000 cap on non-economic damages in any action for a serious injury arising out of a motor vehicle accident that is brought by or on behalf of an at-fault injured person who is not barred from recovery by CPLR § 1411 where the injured person was: (1) operating an uninsured motor vehicle that the person was responsible for insuring under Vehicle and Traffic Law Article 6, except if there is a lapse in coverage of less than 30 days; (2) operating a motor vehicle while impaired at the time of the accident and convicted of such offense; or (3) operating a motor vehicle in the commission of a felony, or immediate flight therefrom, at the time of the accident, and convicted of such felony. This cap does not apply in an action for injuries resulting in death.”
Lastly, Part EE additionally created CPLR § 1411(b) which states that “in any action to recover damages for personal injury subject to Insurance Law Article 51, the culpable conduct attributable to the claimant bars recovery if the culpable conduct of the claimant is greater than the culpable conduct or combined culpable conduct of the person or persons against whom recovery is sought.”