New York Wants to Close the Loophole That Lets Car Insurers Raise Your Rates Without Approval

On September 9, 2026,the New York State Department of Financial Services (DFS) proposed a new rulethat would stop auto insurers from raising rates without the state's sign-off —closing a loophole that currently lets them push through increases with noreview at all. The public comment period is open now, and the underlying lawtakes effect November 27, 2026.

The Loophole This Closes

Under New York'scurrent “flex-rating” system, private passenger auto insurers don't need DFSapproval for every rate increase. They can put through up to two overallaverage rate hikes a year without prior review, as long as the combined effectstays within 5%. Anything beyond that already requires approval — but a lot ofroom exists under that 5% ceiling.

The new proposal wouldeliminate that carve-out entirely. Under the rule as written, insurers wouldneed express, prior DFS approval before any upward rate change, full stop. Theywould also have to notify policyholders about rate decreases and explain thereasons behind any rate change, up or down.

Why This Is Happening Now

This proposal isn'tstanding alone — it's DFS's way of enforcing reforms the Legislature alreadypassed as part of the state's FY2027 budget, signed into law in May 2026. Thosereforms were aimed squarely at auto insurance costs and the claims process, including:

●     Removing the “90/180-day” category from the legal definition ofa “serious injury” under Insurance Law § 5102(d) — one of the thresholds thatdetermines whether an injured driver can sue for pain and suffering

●     Capping non-economic damages at $100,000 for people convicted ofcertain dangerous or unlawful conduct (such as DWI) at the time of the crash,except in death cases

●     Barring recovery of non-economic damages for claimants foundprimarily at fault for the accident

●     Requiring insurers to account for the expected savings fromthese reforms in their rate filings going forward

In plain terms: thestate changed the rules that determine how much insurers typically pay out onclaims, and it now wants proof — through mandatory prior approval — that anyresulting savings actually show up in what New Yorkers pay, rather than disappearinginto insurer profit.

What This Means for You

●     If finalized, your insurer can't raise your rate without thestate reviewing and approving it first — not just for large increases, but forany increase.

●     You're entitled to a clearer explanation when your rate changes,in either direction.

●     If you're in an accident after the reforms take effect, the“serious injury” threshold your claim is measured against has changed — the90/180-day category is gone, which can affect whether you're eligible to pursuea claim for pain and suffering at all.

●     If you were found partly at fault, or if there's any allegationof unlawful conduct at the time of the crash, the damages available to you maynow be limited in ways they weren't before May 2026.

The Comment Period Is Open

DFS's proposal is openfor public comment for 60 days from its publication in the State Register, soNew Yorkers and industry groups can weigh in before it's finalized. You canreview the proposal and submit feedback through the DFS regulatory activity pageat dfs.ny.gov/industry_guidance/regulatory_activity/insurance. Whatever yourview on the rate rule itself, it's worth knowing the underlying reforms arealready law and take full effect November 27, 2026 — regardless of how therate-approval rule shakes out.

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