‘Bait and switch’ bill advances in N.Y. Assembly

May 26, 2021

PIANY priority legislation to address and curtail the issue of bait and switch in the auto insurance market has been reported out of the New York state Assembly Insurance Committee (23-0). The legislation, A.1809, would prohibit insurance carriers from rerating policies when they run an individual’s motor vehicle report after the policy is bound.

Identical legislation (S.3578), has been introduced in the state Senate. PIANY will continue to advocate for this legislation to advance through both houses and get signed into law this year.

Bill’s importance

Advocating against bait and switch is important because intentionally disregarding driver history information to present a false price to a customer undermines the credibility of the insurance industry.

Responsible insurance agents and companies utilize all available underwriting resources before binding an insurance policy. These bills would ensure that all entities are acting responsibly and preserve consumer trust in the insurance industry.

When insurance carriers practice bait and switch, it means that they are running MVRs after binding auto policies, and changing the premium rate of the policy. Often, the policyholder’s premium increases substantially shortly after it is bound. In many cases, the policyholder doesn’t know that the policy premium could change after it is bound.

Currently, carriers are permitted to change the terms—including the premium—of a policy within the policy’s first 60 days. In practice, this has allowed some carriers to delay running MVRs before the policy is bound, with the understanding that they can make changes to the policy after the applicant already has committed it.

While the legislation does not get rid of the 60-day free-look window, it would require carriers that utilize MVRs to rate auto policies to run those reports before the policy is bound. Additionally, those carriers would be required to verify the driving history on all named-drivers listed by the applicant.

Bait and switch is one of PIANY’s 2021 legislative priorities. You can track these and other bills with the PIAdvocacy bill tracker.

Clare Irvine, Esq.
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Clare Irvine, Esq., graduated from Fordham University School of Law and Arizona State University.

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