N.Y.: TED Part FF: Improve fraud reporting without compromising enforcement

In our ongoing series examining the insurance-related proposals in Gov. Kathy Hochul’s Executive Budget, we’ve explored measures aimed at transparency, mitigation and litigation reform. Now, we turn to Part FF—a proposal focused on a less visible, but critically important issue: how suspected insurance fraud is identified, investigated and reported.

As we’ve noted throughout this series, this is a rare moment for insurance policy in New York state. It has been decades since a governor has included substantive insurance reforms in the Executive Budget. That makes engagement from industry professionals not just helpful—but essential.

Part FF addresses a practical challenge that insurers and producers encounter behind the scenes every day: balancing the need for timely fraud reporting with the reality of complex investigations.

What it does

Part FF would extend the time frame for reporting suspected fraudulent insurance transactions to the New York State Department of Financial Services from 30 days to 60 days.

Under current law, insurers and other required parties must report suspected fraud within 30 days of detection. The proposal recognizes that, in many cases, identifying and substantiating fraud is not a quick or straightforward process.

The proposal also would amend Insurance Law Section 5106 to clarify that an insurer’s failure to pay or deny a claim within 30 days does not prevent the insurer from later asserting defenses. Importantly, existing consumer protections—such as interest on overdue payments and attorney’s fees—would remain in place.

Together, these changes are designed to improve both the quality of fraud referrals and the fairness of the claims process.

Why it matters

Insurance fraud is not a victimless issue. It is a cost driver that affects the entire system, ultimately showing up in the premiums paid by policyholders.

Producers may not always see fraud investigations unfold directly, but you see the downstream effects: higher premiums, stricter underwriting and increased scrutiny on legitimate claims.

Effective fraud enforcement depends on accurate, well-supported referrals. But building those referrals takes time. Investigations often require:

• reviewing detailed claims files;
• gathering and verifying documentation;
• coordinating with adjusters, medical providers or third parties; and
• identifying patterns that distinguish legitimate claims from suspicious activity.

The current 30-day requirement can create pressure to report before that process is complete. That can lead to incomplete or less substantiated referrals—outcomes that do not serve regulators, insurers or consumers particularly well.

By extending the reporting window to 60 days, Part FF would allow insurers to complete more thorough investigations and submit higher-quality fraud referrals.

That is a meaningful improvement. Stronger referrals increase the likelihood of effective enforcement, reduce wasted regulatory resources, and help ensure that fraud cases are built on solid evidence rather than preliminary suspicion.

Just as importantly, the proposal does not weaken the obligation to report suspected fraud. It simply aligns the reporting timeline with the operational realities of modern claims investigation.

A balanced approach to claims handling

The accompanying clarification to Insurance Law Section 5106 would address another practical issue. In complex or suspicious claims, insurers may need additional time to investigate before making a coverage determination.

Without this clarification, there is a risk that insurers could be penalized for taking the time necessary to fully evaluate a claim—particularly in cases involving potential fraud.

Part FF would strike a careful balance. It would preserve important consumer protections while ensuring that insurers are not forced into premature decisions that could either result in improper claim payments or limit their ability to raise legitimate defenses later.

For producers, this would translate into a more stable and predictable claims environment—one in which thorough investigation is supported, not discouraged.

Why PIANY supports Part FF

PIANY supports Part FF because it reflects a common-sense adjustment grounded in real-world experience.

This proposal recognizes two important truths. First, fraud detection is complex. It requires diligence, coordination and time. Second, effective enforcement depends on the quality—not just the speed—of reporting.

By extending the reporting time frame and clarifying claims-handling standards, Part FF would:

• improve the accuracy and usefulness of fraud referrals;
• enhance regulatory enforcement efforts;
• reduce unnecessary administrative burdens; and
• support a fair and stable insurance marketplace.

This approach is consistent with PIANY’s long-standing advocacy for policies that balance strong consumer protections with practical, operationally sound standards for insurers and agents.

Where we are now

Like other insurance measures proposed in the Executive Budget, Part FF will undergo negotiations among the governor, the Assembly, and the Senate in the weeks ahead. A review of the Assembly and Senate “one-house” budgets suggests that discussions surrounding Part FF could prove more challenging than expected.

Upholding a tradition set by Assembly Speaker Carl Heastie, D-83, the Assembly’s one-house budget omitted all “nonfiscal policy” provisions, including the insurance reforms put forth by the governor. Meanwhile, the Senate, which typically incorporates nonfiscal policies, intentionally left out Section FF, indicating a preference for a more comprehensive debate on the matter.

The budget process will soon move into a reconciliation phase, when the governor and legislative leaders will work to resolve differences between their respective budgets and aim to finalize an agreement before Wednesday, April 1, 2026.

The inclusion—or exclusion—of proposals like this will shape how effectively New York state addresses key cost drivers within its insurance system.

What you can do

Between now and April 1, PIANY members can make a meaningful difference. 

Participate in PIANY’s District Office Visit Program. Face-to-face conversations with legislators and staff remain one of the most effective advocacy tools available. Sharing real-world examples of how insurance systems work—and how rising litigation costs affect affordability—helps policymakers understand the practical impact of their decisions. 

Respond to grassroots alerts. When action alerts are issued, take 30 seconds to respond. Personalized outreach from local agents carries weight, especially during the final days of budget negotiations. Contact the governor today. 

Share your experience. If you have client stories that demonstrate how insurance coverage protected families, helped drivers recover after an accident or stabilized premiums, share them with PIANY. Real-world examples strengthen advocacy efforts and help lawmakers connect policy decisions with everyday outcomes. 

As the budget process continues, engagement from insurance professionals will be critical. Part FF represents an opportunity to strengthen the ability to investigate and report fraud, which drives up costs for New York state drivers. 

Stay engaged. Stay informed. And make your voice heard.

New York TED 2026 series 

N.Y.: Have you met TED (again)? 

N.Y.: TED Part BB: A once-in-a-generation opportunity to improve premium transparency 

N.Y.: TED Part CC: Protecting market stability—why Part CC misses the mark 

N.Y.: TED Part DD: Rewarding real risk reduction—without distorting the market 

N.Y.: TED Part EE: Preserving no-fault benefits while reducing unnecessary litigation

N.Y.: TED Part FF: Improve fraud reporting without compromising enforcement