By Scott Hobson, AVP of Government Relations
SHobson@BigINY.org
New York’s budget process is in full swing, and Governor Hochul recently released her executive budget proposal. As the first step in the budget process, the Governor’s proposal lays out her vision for how the state will collect and spend tax dollars, as well as major policy initiatives for the year. Next, each house of the legislature will issue their own proposals, and the legislative leaders and governor will negotiate on a final budget, which is due by April 1st.
Many of the Governor’s proposals would impact IAs and their customers. Throughout the budget process Big I NY’s government affairs team will work with lawmakers and Governor Hochul to support pro-consumer measures and defeat those which are harmful. These issues and our position are outlined below.
SUPPORT Changes to Supplemental Spousal Liability Opt-Out Law (Executive Budget, TED Part DD)
What it does: Makes common sense changes to the recent law that made supplemental spousal liability opt-out, rather than opt-in. Automatic enrollment would apply only to married policyholders, and would exempt commercial auto policies.
Why it is good for consumers: Supplemental Spousal Liability coverage is an often overlooked, valuable, and affordable or even no-cost coverage that benefits married drivers. However, the 2022 opt-in law resulted in situations where unmarried drivers were automatically enrolled in coverage they would not benefit from. Moreover, the coverage is rarely a benefit for commercial auto polices.
SUPPORT the Extension of the Internet Point Insurance Reduction Program (Executive Budget, TED Part F)
What it does: This program provides a 10% reduction for three years, from the base rate of current liability, no-fault and collision premiums for drivers who complete an approved point reduction course. The executive budget would extend the program until 2026. It is currently due to expire April 1, 2024.
Why it is good for consumers: The program improves public safety and gives drivers a much-needed reduction in their insurance rates.
SUPPORT Property Resiliency Initiatives (Executive Budget, Capital Projects Allocation)
What it does: Provide $435 million for resiliency projects to protect communities from severe floods, including $250 million for a voluntary buyout program.
Why it is good for consumers: Multiple studies have shown that for every dollar spent on preventative measures, it saves approximately $4 in future losses. By actively implementing risk mitigation strategies, communities and consumers can help harden property and better protect it. The implementation of risk mitigation strategies should make certain properties more appealing to insure, adequately cover and accurately price.
OPPOSE Unfair, Deceptive, and Abusive Acts and Practices (Executive Budget, TED Part JJ)
What it does: The proposed expansion of the law surrounding Unfair, Deceptive, and Abusive Acts and Practices (UDAAP), would significantly expand the scope of business conduct that is considered illegal, including subjective standards such as “likely to cause substantial injury”, and “takes unreasonable advantage of a person’s lack of understanding of the material risks, costs, or conditions of a product or service.” It provides for enforcement by the Attorney General and private lawsuits, with minimum damages of $1,000, and mandatory attorney’s fees and court costs to a prevailing plaintiff. The proposal includes a 30-day cure period in cases where damages exceed $500.
Why it is bad for consumers: While well-intentioned, this bill will have significant unintended consequences. It creates powerful incentives for private litigation, which is likely to give rise to a wave of abusive “shakedown” lawsuits against businesses. This will harm the state’s economic recovery and put further pressure on the increasingly strained insurance market, driving up rates for businesses and consumers.
SUPPORT Online Insurance Verification (Executive Budget, TED Part H)
What it does: Create an Online Verification (OLV) system that would allow for real-time verification of motor vehicle liability insurance. It would replace the state’s current reporting system.
Why it is good for consumers: Currently, insurers providing motor vehicle liability insurance on vehicles registered in New York report coverage information on those vehicles to the Department of Motor Vehicles (DMV) using the Insurance Information and Enforcement System (IIES.) The IIES technology, introduced and implemented in 1999, is outdated and relies on manual processing by both DMV and insurers. Manual entry makes it more likely that law enforcement officers will erroneously identify a driver who carries liability insurance as uninsured. They may unfairly accuse these drivers and ticket or even arrest them for failure to carry the required coverage. The drivers may face charges of misdemeanor driving without insurance.
SUPPORT Market-Based Interest on Judgments (Executive Budget, PPGG Part R)
What it does: This bill would permit a variable market-based, rather than a fixed 9% interest rate to be assessed on court judgments and accrued claims, resulting in lower State taxpayer costs and relief to local governments.
Why it is good for consumers: This proposal would reduce the amount of interest paid by the State on court judgments and accrued claims by approximately $2.5 million annually. Additionally, passage of this bill would provide fiscal relief to local governments and businesses.