New York Automobile Tort Reform – What Insurers Need to Know for Future Rate Filings
- Written By Zach Cohen
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New York’s 2026 automobile tort reform introduces new filing requirements that will affect every insurer writing motor vehicle insurance in the state. On July 1, 2026, the New York Department of Financial Services (“DFS”) issued Circular Letter No. 3 summarizing the law changes affecting motor vehicle insurance that were enacted to address factors contributing to rising premiums. The legislation includes reforms aimed at reducing fraudulent and abusive claim practices, limiting certain non-economic damage recoveries, and modifying New York’s personal auto rate filing requirements. Any insurer writing automobile insurance in the state will need to comply with the new filing requirements in pending and future filings.
In this blog, we’ll walk you through what has changed, what this means for auto insurers, and how Perr&Knight can assist.
What Changed?
The 2026 reforms fall into three primary categories: changes to the Fraudulent Insurance Act, revisions to New York’s serious injury and non-economic damages provisions, and modifications to flex rating for nonbusiness motor vehicle insurance. While each change has regulatory significance, its expected impact on insurers varies considerably.
First, the reforms expand the definition of a fraudulent insurance act to include individuals who hire, encourage, or orchestrate staged motor vehicle accidents. The intent is to strengthen prosecution of organized insurance fraud and deter staged accidents. Although the impact is uncertain, the change is expected to reduce fraudulent claims over time.
Second, the reforms address non-economic losses and remove the “90/180-day” serious injury category, which previously allowed certain non-permanent injuries that substantially disrupted an injured person’s daily activities to qualify as serious injuries. This change is expected to reduce the number of claims eligible for non-economic damages.
The order in which fault and serious injury are evaluated has changed. Previously, there was no sequence for determining fault and serious injury; now the reform requires fault to be established first. By resolving fault before evaluating serious injury, the reforms may reduce unnecessary litigation and defense costs in cases where liability cannot be established.
The reforms also impose a $100,000 cap on non-economic damages for certain claimants engaged in specified wrongful conduct, such as operating an uninsured vehicle, driving while impaired, or committing a felony at the time of the accident. In addition, New York has adopted a modified comparative negligence standard, which is expected to eliminate recovery for personal injury claimants who are found to be more at fault than the insured against whom recovery is sought.
Third, starting November 27, 2026, the state will eliminate the ability of personal auto insurers to implement rate increases of up to 5% without prior approval. Insurers may decrease rates by up to 5% without prior approval until May 27, 2030.
While the legal reforms vary in scope, collectively they are expected to reduce claim frequency, claim severity, and loss adjustment expenses. This leads us directly to the DFS’s new filing requirements discussed below.
What Does This Mean for Insurers?
Any insurer with a pending New York motor vehicle rate filing, or planning to submit a future motor vehicle filing, is affected by the new requirements. Pending filings must be updated by August 31, 2026. The DFS expects insurers to evaluate the impact on claim frequency, claim severity, loss adjustment expenses, and any other relevant factors. Insurers must consider the impact of the reforms and provide supporting information in the new Exhibit TR-1, Automobile Tort Reform Calculation. Exhibit TR-1 requires insurers to identify the expected percentage decrease in anticipated loss and loss adjustment expenses resulting from the reforms. It also requires a detailed explanation of how that percentage was derived, including the specific calculations, actuarial processes, procedures, methodologies, and assumptions used.
How Can Insurers Estimate the Impact?
When a reform is passed, insurers may have little or no post-reform loss experience but still need to incorporate the reform’s impact in their program. How does an insurer estimate the impact without credible post-reform data? Historical experience, auto industry knowledge, and claim metric benchmarks can all inform the estimate.
Whatever the approach, the estimate needs to have actuarial support to ensure a reasonable impact on the company’s book of business.
How Perr&Knight Can Help
Navigating New York’s tort reform and the resulting filing requirements can be challenging. Perr&Knight offers a strong team of actuarial consultants with extensive New York filing experience and knowledge of the reform to help insurers navigate these new requirements with confidence.
