Hochul Says She’ll Rein in Big Insurance With ‘Excess Profit’ Law; Experts Call That A ‘Joke’

"This is not a consumer protection," one expert said, because New York law allows for a lot of excess profits.

By Kevin Duggan

Is this consumer protection — or a protection racket?

Gov. Hochul claims that the state’s “excess profits” law will prevent auto insurance companies from pocketing the savings from her Uber-backed proposals to erode crash victims’ rights to sue for damages, but that law is a “joke” that has ever actually been used, lawmakers said.

As part of their multi-pronged attack on the governor’s effort to cut expenses for motorists at the cost of victims’ rights, senior Albany pols are questioning whether any savings will be passed on to ratepayers under the “excess profits” law, given that it allows insurers to keep profits of up to 21 percent – a cap so high that no company has ever had to return funds.

“Our excess profit law is a joke, and to my understanding, it’s never been used,” state Senate Deputy Leader Michael Gianaris (D–Astoria) told Streetsblog. “It’s not serving its purpose, at the very least.”…

Lawmakers, consumer watchdogs and trial lawyers opposed to her agenda have questioned the effectiveness of the Empire State’s opaque oversight over the industry by its insurance regulator, the Department of Financial Services, which approved increases of as much as 22 percent less than two years ago, when Hochul was governor. So even if insurers send out one-time rebates, that won’t stop them from claiming small profits and jacking up premiums the next time around.

“Unless there are structural changes to the regulatory law, it’s all going to jump back up again,” said Joanne Doroshow, the executive director of the Center For Justice & Democracy at New York Law School. “There’s a lot of accounting manipulation that goes on in the industry, which most people do not understand and lawmakers do not understand.”

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