Multi-year market conduct investigations by the New York State Department of Financial Services have resulted in $20 million in fines and consent orders against three dozen auto insurers – for failing to timely report new and terminated auto insurance policies.
“Accurate and timely reporting by insurers is critical to protecting New Yorkers on the road, ensuring compliance with state laws, and maintaining the integrity of our enforcement systems,” DFS Superintendent Adrienne Harris said in a news release this week. “These actions demonstrate DFS’s unwavering commitment to holding insurers accountable and safeguarding consumers.”
Insurance groups have said the state’s aging reporting system is not online and makes it difficult for all insurers to report information quickly.
The department levied fines and secured 37 consent orders against insurers, including all of the biggest names in the industry. The average fine came to about $551,000, and larger carriers with more policies in force had to pay more. The fines and carriers listed below include their affiliated and subsidiary insurance companies, according to the consent orders:
- State Farm $2.5 million
- Zurich $2.2 million
- Progressive $2 million
- Chubb $1.1 million
- GEICO $910,000
- Allstate $796,000
- Farmers $764,000
Many of the alleged violations date from 2018. The DFS noted in the consent orders that it had warned the insurance industry in late 2017 that insurers were not reporting policy information in a timely manner, as required by state law.
New York law approved in 2000 requires auto insurers to report newly insured vehicles to the state Department of Motor Vehicles within seven days, and must report suspensions and terminations within 30 days, Harris explained. That helps ensure that law enforcement agencies can identify uninsured vehicles, lets DMV maintain accurate records, and helps protect other drivers in the event of an accident, the statement said.
“Throughout 2018 and 2019, DMV and the Department (DFS) met with the insurance industry regarding the issue of untimely IIES (Insurance Information & Enforcement System) filings, providing the industry with opportunities to address and remediate persistent reporting failures,” several of the consent orders explain.
The companies cited have 10 days to pay the fines. They also must not claim tax deductions for the penalties, the orders read. The carriers also must take steps to prevent recurrences in the future.
“Within two months from the date of full execution of this Consent Order, the Company shall provide to DMV a written remediation plan detailing the corrective actions taken or proposed to be taken, and the related projected timeframes, to achieve full compliance with this Consent Order,” several orders note.
The problem, insurers and trade groups have said for years, is that New York’s antiquated reporting system is not online and is slow and difficult to use. The fact that so many insurers were cited attests to the issues with the state’s IIES system, and the system needs to be improved, advocates have said.
A spokesman for State Farm suggested that an online system would make it easier for insurers to comply with the reporting requirements.
“We continue to work with the DMV, the legislature and the governor’s office to reach an agreement on legislation authorizing an online verification system to replace the current, outdated system,” State Farm’s Justin Tomczak said in an email.
The New York Insurance Association also is hoping for changes to the system.
The Association (NYIA) “and its members look forward to working with public policymakers to bring a modernized auto liability insurance reporting system to New York,” NYIA President Cassandra Anderson said in a statement. “It is crucial for drivers in the state that the most reliable and accurate reporting method is used so someone is not mistakenly identified as uninsured. NYIA appreciates the Legislature and DMV’s efforts to start the process of adopting a new system and we are eager to collaborate with all stakeholders this session to pass legislation that will officially authorize the implementation of online verification.”
The full listing of DFS consent orders and enforcement actions against insurers in recent years can be seen here.
Harris was appointed by New York Gov. Kathy Hochul in 2021 and was confirmed by the state Senate in January 2022. Before that, she was an attorney with Sullivan and Cromwell law firm, and later was senior advisor at the U.S. Treasury and worked at the White House under President Obama, according to DFS. Later, she was general counsel and chief business officer at States Title Inc.
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