The New York State Department of Financial Services (DFS) has levied $20 million in fines against 37 auto insurers for failing to report new and terminated insurance policies in a timely manner, as required by state law.
“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. “These actions demonstrate DFS’s unwavering commitment to holding insurers accountable and safeguarding consumers.”
The fines, which average $551,000 per insurer, were based on violations dating back to 2018. Among the largest penalties were:
• 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
New York law, enacted in 2000, mandates insurers report newly insured vehicles to the state’s Department of Motor Vehicles (DMV) within seven days and policy suspensions or terminations within 30 days. These reports help law enforcement identify uninsured vehicles and maintain accurate records in the event of an accident.
Despite warnings from DFS in 2017 and discussions between insurers, DFS and DMV in 2018 and 2019, many companies continued to experience reporting failures. Insurers have attributed these challenges to New York’s outdated Insurance Information & Enforcement System (IIES), which is not online and reportedly difficult to use.
“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office to reach an agreement on legislation authorizing an online verification system to replace the current, outdated system,” State Farm spokesman Justin Tomczak told Insurance Journal.
In addition to paying fines within 10 days, insurers must submit a written remediation plan to the DMV within two months, outlining corrective actions and projected compliance timeframes. They are also prohibited from claiming tax deductions for the penalties.
DFS maintains that the enforcement actions serve as a warning to insurers to comply with state law and improve their reporting processes.
