Auto Insurance Reform a Practical Path to Affordability and Fairness for All New Yorkers
A True Affordability Agenda Must Address the Stealth Auto Insurance Premium Crisis That Disproportionately Impacts Communities of Color
(Albany, NY) – A new white paper entitled New York Auto Insurance: A Market-Based Approach to Affordability and Fairness outlines how the state’s auto insurance premiums, among the highest in the nation, contribute significantly to the affordability crisis, with the burden disproportionately borne by Black and brown dicers.
Authored by Michael A. Grant, J.D., a policy analyst and advocate with extensive experience examining public policies through the lens of fairness and market-based reform, for the Institute of the Black World 21st Century, the white paper analyzes the key structural factors driving New York’s inflated premiums, including rampant and unchecked accident fraud, an aggressive litigation environment, and the use of non-driving factors to set rates.
“The auto insurance crisis in New York is not just a numbers problem, it’s a fairness problem for families trying to make ends meet,” Dr. Grant said. “By adopting targeted reforms that reduce fraud, remove discriminatory pricing practices, and align rates with actual risk, we can lower costs for all New Yorkers – particularly younger drivers and individuals of color – while ensuring equal protection under the law. This is a pragmatic path that honors both economic livelihood and social equity, and it aligns with the governor’s commitment to responsible, effective government.”
Key findings highlighted in the white paper, available in full here, include:
- A persistent affordability gap: New York drivers pay an average of more than $4,000 annually for full coverage – far above the national average – with burdens disproportionately borne by lower-income households and communities of color. A household earning $40,000 annually devotes roughly 10 percent of its income to auto insurance alone, and that’s before paying for gas, maintenance, or a car loan. At $60,000, the burden is nearly 7 percent.
- Structural cost drivers: Fraud, staged accidents, and no-fault abuse contribute significantly to rising premium rates, eroding the purchasing power of middle and working-class families.
- Disproportionate impact on minority communities: Black drivers pay notably higher premiums, and urban neighborhoods of color experience markedly higher costs compared with comparable white neighborhoods. Residents of urban areas like Brooklyn, for example, pay over $6,700 on average for full coverage, compared with roughly $1,777 in more rural areas. The burden is particularly heavy for women of color who earn less on average but pay some of the highest insurance premiums of any demographic group.
- Fraud and litigation are real cost drivers: New York has established a no-fault insurance framework that invites fraud and abuse and ranked second in the nation for staged car crashes in 2023. The state Department of Financial Services (DFS)’s 2024 annual report finding that insurance carriers reported 44,361 incidents of suspected motor vehicle insurance fraud in 2024, an all-time high and increase of approximately 83% since 2020. The Federal Bureau of Investigations estimates that staged accidents are now costing the insurance industry $20 billion a year, which drives up insurance rates by an average of up to $300 a year for every insured car.
- The promise of reform: Reforms targeted at reining in the accident fraud boom will curb costs while preserving essential protections for crash victims and maintaining access to affordable coverage. Lower premiums statewide would help alleviate the affordability crisis while also reducing the backlog in the state’s overburdened court system and creating a foundation for future reforms that can further restrict discriminatory pricing and promote fair access to coverage.
“As a former president of the National Bankers Association, a chapter president of the Nashville Branch of the N.A.A.C.P, and a co-founder of Black Wealth 2020, I have spent decades examining public policies that undermine the advancement and fair treatment of African Americans,” Dr. Grant wrote. “The cost of auto insurance in New York is one such policy failure that demands attention from leaders across the political spectrum.”
