We have to fix NY's broken car insurance system. It's racial justice.Michael A. Grant |
For Black and Brown New Yorkers, the freedom of the road comes with a discriminatory surcharge.
In a state grappling with a relentless cost-of-living crisis and some of the highest auto insurance premiums in the nation, our insurance system has devolved into a modern-day version of redlining, one that has stalled the engines of economic mobility for those most striving to achieve it.
Black neighborhoods in New York City, for example, pay as much 83% more for the same coverage than those in predominantly white neighborhoods, even when their risk profiles are comparably similar. This burden is particularly heavy for women of color, who earn less on average yet face some of the highest premiums of any demographic.
Fixing this disaster requires the political will to tackle entrenched special interests, specifically a powerful trial lawyer lobby profiting from a tsunami of litigation fueled by staged accidents and rampant fraud.
Albany lawmakers should work with Hochul to tackle a real crisis
Gov. Kathy Hochul’s proposals to tackle fraudulent claims and staged accidents address a genuine crisis. Now, lawmakers must move swiftly to hold the criminal masterminds of these fraud rings legally liable, tighten the serious injury threshold to require objective medical proof, and ensure that savings from these reforms are passed directly back to policyholders.
It’s also a matter of reversing longstanding racial inequities.
For too long, insurance companies have relied on non-driving factors like zip codes, credit scores, and educational attainment to set premiums.
These metrics serve as proxies that penalize Black and Brown communities already struggling with systemic economic disadvantages. This structural inequity is further compounded by a "fraud tax" that acts as a regressive drain on those who can least afford it. When organized crime rings orchestrate staged accidents, they trigger a cascade of litigation and inflated claims that are passed directly to drivers.
In effect, every dollar siphoned off by a fraudulent medical claim or jackpot settlement is a dollar taken from a working family’s grocery or rent budget. For a worker earning $40,000 annually with poor credit, insurance premiums can approach nearly 20% of take-home pay comparable to the cost of an additional car loan payment or several months of rent — and that’s even before buying a gallon of gas.
Now, lawmakers must move swiftly to hold the criminal masterminds of these rings legally liable and reform the system.
We need to get this right.
We cannot leave vulnerable NY drivers exposed
If this trend is allowed to continue unchecked, the most vulnerable New York drivers will continue to be penalized with disproportionately higher rates.
Drivers in their early twenties, for example, face annual premiums averaging $6,600 to $7,800, costs that keep many young adults from driving legally, reducing opportunities for work, school, and economic participation.
Geographic disparities and stagnant wage growth rising much slower than the growth in premiums further compound the problem.
The benefits of reform could reach well beyond individual households. Statewide premium reductions would ease the affordability crisis, relieve the state’s overburdened court system, and create a foundation for future reforms that further restrict discriminatory pricing and promote fair access to coverage.
Furthermore, if New York can achieve savings realized in other states that have reformed their insurance markets, New Yorkers’ premiums could shrink 10 percent, saving them at least $200 per vehicle per year.
These affordability challenges did not arise by accident, and they will not be resolved overnight.
Still, it is critical to begin somewhere, and the governor’s proposals represent the most meaningful and serious attempt in decades to address the some of the core drivers of rising costs and unequal pricing.
In tackling these reforms, the state Legislature has the opportunity to establish an important precedent:
Public policy can and should align with free-market principles while protecting vulnerable consumers from inefficiency, fraud, and opaque pricing.
Taking these first steps is both a moral and practical imperative. If we pursue these reforms with transparency and backbone, we can finally build an auto insurance system that works for all New Yorkers. It’s time for a system where your bill is based on how you drive, not a system that uses modern-day redlining to trap drivers in a cycle of debt.
It's about lifting the poverty surcharge off the backs of Black and Brown families and clearing the road to economic opportunity.
Michael A. Grant, J.D., is the former president of the National Bankers Association, former president of the Nashville branch of the NAACP and a co-founder of Black Wealth 2020.