New York Codes, Rules and Regulations › Title 11 - INSURANCE › Chapter V - Rates And Rating Organizations › Subchapter G - Noncommercial Automobile Insurance Rates For Inexperienced Operators › Part 168 - Noncommercial Private Passenger Automobile Insurance Rates For Inexperienced Principal Operators › Section 168.1 - Preamble

Current through Register Vol. 46, No. 28, July 10, 2024
(a) Section 2332  of the Insurance Law requires that all
				  rates, rating plans, rating rules and rate manuals approved to be effective on
				  and after January 1, 1981, which are applicable to noncommercial private
				  passenger automobile collision, no-fault, bodily injury liability and property
				  damage liability coverages, shall reflect "______ an appropriate rate
				  differential between an experienced and inexperienced principal operator." The
				  enactment of section 2332 represents a legislative recognition that experienced
				  drivers will have significantly better accident records and lower insurance
				  losses than inexperienced drivers. Pursuant to statutory requirement, the
				  superintendent conducted a public hearing on the subject of a rate differential
				  between experienced and inexperienced operators. The purpose of this
				  implementing regulation, which requires a differential for inexperienced
				  drivers, is to eliminate or minimize subsidization of inexperienced drivers by
				  experienced drivers.
(b) A
				  substantial number of insurers currently utilize some form of surcharge for
				  inexperienced drivers above the rate for experienced drivers. Surcharges for
				  inexperience vary among insurers, but average approximately 20 percent above
				  their rates for experienced drivers. Leading insurers submitted preliminary
				  data during the course of the public hearing which indicated that loss ratios
				  for inexperienced drivers (i.e., those licensed less than three years) were
				  substantially greater than 20 percent above the loss ratios of experienced
				  drivers (i.e., those licensed three or more years).
(c) A review of all information available at
				  this time indicates that a differential for inexperienced drivers of at least
				  20 percent is justified. It would be inappropriate to require a larger initial
				  minimum differential, because:
(1) prior to
				  the enactment of section 2332, most insurers' statistical plans did not require
				  that loss data be maintained on inexperienced operators. Because the number of
				  inexperienced drivers is relatively small in relation to the total number of
				  drivers, even those insurers which have maintained such a classification have
				  difficulty in assembling credible statistics;
(2) insurer classification systems and books
				  of business vary widely, making it difficult to rigidly apply the experience of
				  one insurer to that of another; and
(3) the minimum differential prescribed by
				  this regulation will result in a rate increase for many inexperienced drivers
				  (offset by an actuarially equivalent decrease for experienced drivers).
The initial minimum increase for inexperienced drivers has
					 thus been tempered until more comprehensive data become available for each
					 insurer.