Car Insurance Crackdown: NY Gov. Hochul, Lawmakers Weigh Limit on Rate Hikes

New York Public News Network | By Jon Campbell

New York Gov. Kathy Hochul and legislative leaders are considering giving regulators more power to limit cost increases for consumers by making insurance companies seek prior state approval for any rate increase, according to three people with knowledge of the talks.

The negotiations between Hochul and the Democrats who control the Legislature come as part of broader talks over the roughly $260 billion state budget, which has been delayed for weeks amid a stalemate over the governor’s push to reshape the state’s auto-insurance laws.

The latest attempt to break that logjam would give state regulators more power to ensure that the governor’s reform plan would curb costs for consumers as Hochul says it would, according to the three people, who were not authorized to discuss the negotiations publicly. Some lawmakers have been skeptical of the plan so far.

But it could draw opposition from auto insurers, who to this point have been major supporters of the governor’s plan. Insurance companies currently have some flexibility to increase rates by a small percentage without state approval.

Speaking to reporters Tuesday, Hochul called the issue an “important part of our conversations.” But she declined to get into any details while the negotiations remain ongoing.

“Yes, we are looking closely at how insurance companies set their rates and what criteria they use,” Hochul said. “The insurance companies, we’re taking a close look at their practices. That’s all I’ll say on that until the details are out.”

The New York Insurance Association, a trade group representing major national and smaller local insurers, did not respond to multiple requests for comment.

The negotiations have centered on reducing what’s known as the state’s “flex rating” law, which has been in effect since the late 2000s. It allows insurers to increase their rates up to 5% in a 12-month period without receiving the state’s prior blessing, with certain caveats.

Insurers already have to seek state approval before raising rates beyond 5%.

At least one plan under consideration would effectively eliminate that measure, instead requiring insurers to get approval from the state Department of Financial Services before implementing any increase at all, the people with knowledge of the proposal said. It’s also possible Hochul and lawmakers could lower the allowable rate hike, perhaps to 2%, according to the people familiar with the talks.

Assemblymember David Weprin, a Queens Democrat who chairs the state Assembly’s insurance committee, confirmed the issue has come up in negotiations.

“We’ve discussed it before,” Weprin said. “It’s not holding up the budget, that part. It’s something that we’ll likely do.”

Hochul’s plan to reform New York’s insurance laws has been one of the biggest sticking points in negotiations over the state budget, which was due before April 1.

The governor and legislative leaders have spent weeks debating whether to prevent someone who is found mostly at fault for a car wreck to receive a payout for damages. Hochul also wants to crack down on staged auto accidents and limit what counts as a “serious injury,” which determines who can seek compensation for pain and suffering.

The insurance battle has pitted deep-pocketed interests against one another, with ride-hailing giant Uber spending millions of dollars to boost the governor’s plan and the New York State Trial Lawyers Association aggressively lobbying against it.

The idea, according to Hochul, is that insurers would see their costs go down and pass the savings onto consumers. The state has regulatory authority over insurers and limits their profits to 21% based on a six-year period, with excess profits returned to ratepayers.

But lawmakers have been seeking additional assurances that the insurers would actually lower their rates as a result of any reforms. This led to the discussions over the flex rating law, according to the three sources.

Budget negotiations, meanwhile, are expected to continue for at least the coming days.

The state Legislature on Monday passed a seventh short-term budget extender, which allows state workers to continue receiving their pay. That doesn’t include lawmakers, whose paychecks are withheld until a budget is passed.

“I can assure you that we’re getting closer on actually all the issues,” said Assembly Ways and Means Committee Chair J. Gary Pretlow, a Mount Vernon Democrat. “I believe we’re closer on auto insurance.”

Includes reporting by Jimmy Vielkind.

Image: New York Gov. Kathy Hochul is seen in this April 16, 2026, file photo during an appearance in Albany. (Mike Groll/Gov. Kathy Hochul’s office)