Governor urged to veto flawed legislation that could raise the cost of insurance
ALBANY, N.Y., July 2, 2012 /PRNewswire-USNewswire/ -- The New York Insurance Association (NYIA) today called on Governor Cuomo to veto legislation adopted in the final hours of the legislative session that could increase the cost of insurance for New York drivers as well as work with key legislators and all interested parties to adopt reform that combats no-fault auto insurance fraud.
"It was crucial that the legislature act this year to enact no-fault auto insurance reform," Ellen Melchionni, president of NYIA said. "The legislature failed to pass meaningful reform that would stop the rampant fraud in the system. Instead legislators passed a bill that will negatively impact consumers and likely result in the state's drivers paying more for their auto insurance."
The legislature adopted S7787/A10784, which amends the supplementary uninsured/underinsured motorist (SUM) law and dilutes consumer choice. Policyholders will now have to opt-out of increased SUM coverage versus the more transparent process of opting-in. The potential effect of this legislation on rates would be devastating to consumers. Individuals could end up paying a lot more for coverage that they didn't even choose to have as part of their auto insurance policy. The legislation also includes a provision related to no-fault that unfortunately will not prove effective in combating fraud. The negative impact of the bill is compounded by the legislature not passing meaningful no-fault reform this year.
"The Governor and Superintendent Lawsky have taken steps administratively to address fraud, but New Yorkers need and deserve comprehensive legislative reforms that fix the broken no-fault system," Melchionni said. "The legislation before the Governor on supplementary uninsured/underinsured coverage is likely to further impact the cost of insurance and affect all New York drivers. This auto insurance bill is far from the answer that New Yorkers and small business have been looking for over the past two years as fraud has increased with innocent policyholders paying the price. We are asking that the Governor veto this bill so that an already bad situation isn't made worse."
In 2010, the state's outdated and broken no-fault auto insurance system cost New Yorkers $385 million. New York drivers pay among the highest rates in the country for auto insurance, in large part because of the rampant fraud. Downstate drivers are hit hardest—New York City area motorists pay as much as 272 percent more than the already high statewide average.
"Superintendent Lawsky and Governor Cuomo have been champions for New Yorkers in attacking fraud and abuse, and we applaud them for their work," Melchionni said. "Now it is our hope that Governor Cuomo will drive a process to implement lasting and impactful legislation to benefit all New Yorkers."
The New York Insurance Association (NYIA®) is a state trade association that has represented the property and casualty insurance industry for 130 years. For more information about NYIA, visit www.nyia.org.
SOURCE New York Insurance Association