New York Legislature Rejects Hikes in Insurance Law Fines

A series of significant fine increases for violating New York insurance law – proposed by outgoing Gov. Eliot Spitzer – have been rejected by the state legislature, a move that one New York agents’ group called a major victory for Empire State agents.

The Spitzer-requested penalties were a series of drastically increased fines for violating insurance law, some of which increased fines by as much as 20 times their current rates.

Under the proposal, for instance, fines for insurance law violation would have grown from $500 to $10,000, fines for selling insurance without a license would have gone from $1,000 to $10,000, and fines for violating the insurance law regarding physical damage inspections of cars would have increased from $500 to $5,000.

The proposed fines have now been eliminated from the budget, said The Independent Insurance Agents & Brokers of New York, which praised members of the Senate and Assembly for their support in fighting off the fines.

Stephen R. Zogby, chairman of the group, said he was impressed with the Legislature’s action. “During a turbulent week, elected officials stayed focused on their mission and in a timely manner. I give them a lot of credit.”

It was not the only fee that agents’ group had railed against which was defeated. The group also said a proposed $15 hike of The Motor Vehicle Law Enforcement and Highway Safety Fee has been eliminated. The increase would have brought to $20, the amount paid to register a vehicle in New York. The fee now remains $5.

Earlier in the month, Zogby had said the fines sought by Spitzer – scheduled to resign at noon today – would proved dangerous to New York insurance agencies.

“Whether it’s the complexities of New York state licensing or simply agency personnel forgetful in their renewal procedures, an increased fine in the thousands of dollars could (have been) financially destructive” to agents in New York, said Stephen R. Zogby, chairman of the group.

The agents’ trade group said it believes in punishing criminal intent in the insurance industry, but opposes dramatic increases in fines.

Source: IIABNY