A file-and-use auto rate filing in New York currently passes one test: the overall average change sits inside a 5% band in either direction. From November 27, 2026, under the Department of Financial Services' proposed Second Amendment to 11 NYCRR 163, it passes three. The overall change has to be a decrease, the decrease has to stay within 5%, and no nonbusiness policy's annual premium may rise.
DFS filed the text on August 21, 2026, the State Register published it on September 9, and comments run to November 9 (DFS, September 2026). Acting Superintendent Kaitlin Asrow said the rule ensures "that any increase in private passenger auto rates is subject to comprehensive and independent review" (Governor's Office, September 9, 2026). The third test is where a pricing actuary's work changes.
Key Takeaways
- 5% survives only as a "permissible flex decrease": amended section 163.2(a) sends every overall average increase and any decrease beyond 5% to prior approval from November 27, 2026, and the flex-band definition is deleted.
- 30%, the old two-way limit on how far file-and-use filings could move one nonbusiness policy's premium in 12 months, becomes a decrease floor, and a new clause routes any filing that raises even one nonbusiness policy to prior approval.
- Two increases per 12 months, with the compounding test and its +2.9% and +2% example, stay in section 163.2(b) unchanged, text the statute now supports only for for-hire policies under section 2328.
- May 27, 2030 is when Circular Letter No. 3 records that section 2350 is repealed and every nonbusiness filing becomes prior approval, making the decrease-only fast track a 42-month transition.
The Amended Text, Subdivision by Subdivision
A new subdivision 163.0(c) restates Part II of Chapter 55 of the Laws of 2026: increases of up to 5% now need prior approval, decreases of up to 5% do not. In section 163.1, file and use in 163.1(g) becomes a change "within the permissible flex decrease or within the permissible flex increase," the flexibility-band definition in 163.1(h) is struck, and a new 163.1(k) defines the permissible flex decrease as an overall average rate level decrease of up to 5% without prior approval.
| Subdivision | Through November 26, 2026 | From November 27, 2026 |
|---|---|---|
| 163.1(h) / (k) | Flex-band: increase or decrease up to plus or minus 5% | Flex-band deleted; permissible flex decrease of up to 5% added |
| 163.2(a) | Increase within 5% is file-and-use | Decrease within 5% is file-and-use; over 5% is prior approval; increase text retained |
| 163.2(b), (d) | Two increases per 12 months, compounded | Unchanged |
| 163.3(b) | No-overall-impact factor filings are file-and-use | Same path; flex-increase clause deleted; tied to the 163.4 decrease limits |
| 163.4(a) | No single policy may change more than 30% in 12 months | May not decrease more than 30%; any increase on a nonbusiness policy means prior approval |
| 163.7 | Notice 30 to 60 days before renewal for any flex change | Notice only for a budget-reform decrease |
Under the current text, a filing that moves any nonbusiness policy's total premium by more than 30% in 12 months goes to prior approval, and the insurer meets the limit "by adjusting the base rates or rating factors," never by capping an individual premium as a final step. The proposed text keeps 30% as a decrease floor and adds a second trigger: a filing that "produces an annual total premium increase on a nonbusiness automobile insurance policy" is "subject to the superintendent's prior approval" (Proposed Second Amendment, section 163.4(a)).
Section 163.7 becomes a decrease notice. An insurer that reduces nonbusiness rates "due to the reforms of the State fiscal year 2026-2027 budget" says so at renewal, 30 to 60 days before the end of the current policy period, implementing Insurance Law section 2356(d), which Part BB of Chapter 58 added with effect from August 24, 2026 (Regulatory Impact Statement, September 2026).
Routing the Exhibit TR-1 Offset Through a Decrease-Only Door
The amendment lands on filings that already carry a mandated cut. Insurance Circular Letter No. 3 (2026), issued July 1, told every motor vehicle insurer to reflect the projected tort-reform savings in all pending and future rate filings, "including filings subject to flex rating under Insurance Law § 2350," with pending filings amended by August 31, 2026. The site's July analysis of Exhibit TR-1 covered the derivation; this rule decides how it gets filed.
A pure bodily-injury decrease clears all three tests, because every nonbusiness policy carries liability coverage and a BI base-rate cut lowers or holds every policy on the book. Take an illustrative book where TR-1 supports a 6% BI cut and collision and comprehensive indicate +4%: the overall change lands near minus 2%, inside the permissible flex decrease, while a full-coverage policy on a newer vehicle rises. Under amended 163.4(a) that one signed difference sends the whole filing to prior approval, and the capping prohibition means the filer cannot hold the rising policies flat as a final step.
Splitting the work is the practical response: the BI decrease goes file-and-use and the physical damage increase goes to prior approval, where Asrow has said DFS "will deny their request for rate" if the projections are missing (Spectrum News, July 1, 2026). The severity re-acceleration the site has tracked makes that increase live.
Even the clean cut is smaller than the state's target. Governor Hochul has cited a Citizens Budget Commission estimate that the reforms "should reduce costs by about 10%" (Repairer Driven News, June 1, 2026). A 10% cut filed in one step exceeds the 5% permissible flex decrease and goes to prior approval regardless. Because the retained compounding test in 163.2(b) applies to increases only, the text is silent on stacking decreases, and the only cumulative limit on the way down is the 30% per-policy floor.
For-hire policies run the mirror image. Insurance Law section 2328, effective December 1, 2025, permits for-hire increases of up to 5% without prior approval, two per 12 months, and says nothing about decreases, so amended 163.4(a) sends a for-hire filing that decreases any policy to prior approval.
Relativity Refreshes and the Text the Amendment Left Behind
Section 163.3(b) still lets an insurer adjust rating factors "in separate and distinct filings independent of an overall average rate decrease," and keeps no-overall-impact filings on file-and-use. It now ties those filings to "the rate decrease limitations for individual insureds contained in section 163.4," whose any-increase clause sits in the same subdivision. A revenue-neutral territory rebalancing or class-plan refit raises some policies by construction; read together, the two subdivisions send it to prior approval. The only exemption the text names is a new model-year factor consistent with an existing model-year rule.
A deletion inside 163.3(b) confirms the direction: the clause saying a rating-factor filing does not preclude a file-and-use increase within the 163.2(b) time periods is struck. Yet 163.2(a), (b) and (d) keep their increase language in full, and none of the three names a policy type. They turn on the term "permissible flex increase," a definition the amendment leaves untouched, and after November 27 the statute supports a file-and-use increase only for for-hire policies under section 2328. As written, the text is for-hire-only by implication, a seam commenters will target before November 9.
Circular Letter No. 3 adds the calendar. Filings submitted before November 27 remain under the current flex provisions, so an August-amended filing stays on the old two-way band until refiled, and section 2350 is repealed on May 27, 2030. Inside that 42-month window, what the decrease-only door cannot carry is the filing a carrier needs most while its rate level falls.
A cut that lowers every policy by the same base-rate factor leaves the relativities where the pre-reform book set them, and the tort reforms move BI loss costs unevenly across territories and classes. Any refresh that re-balances them raises some policies, and from November 27 it waits in the same prior-approval queue as the carrier's physical damage increase. The fast track was built for the cut the state wants to see; the filing that keeps the cut from anti-selecting the book stands in line behind it.
Further Reading
- NY DFS Exhibit TR-1: Pricing the 2026 Auto Tort Reform Savings – The direct predecessor to this piece: how Circular Letter No. 3 requires the tort-reform offset to be derived and disclosed.
- Auto Rate Cuts Collide With a Severity Re-Acceleration – The physical damage severity trend that turns a paired filing into a prior-approval filing under the amended rule.
- Illinois's Rate-Review Law Turns Actuarial Credibility Into a Statutory Test – A second state rewriting its review of homeowners and auto filings in 2026, with the test applied at the indication level.
- California's Intervenor Overhaul Rewrites Who Pays to Fight a Rate Filing – The prior-approval process at the other end of the country, and what its review timelines look like in practice.
- Tariff Parts Inflation Resets Commercial Auto Physical Damage Trend – The parts-cost driver behind the physical damage indications that now need their own filing.
Sources
- New York State Department of Financial Services, Proposed Second Amendment to 11 NYCRR 163 (Insurance Regulation 153), Flexible Rating for Nonbusiness Automobile and For Hire Motor Vehicle Insurance Policies, text (filed August 21, 2026)
- New York State Department of Financial Services, Regulatory Impact Statement and SAPA statements for the Proposed Second Amendment to 11 NYCRR 163 (September 2026)
- New York State Department of Financial Services, Regulatory Activity, Insurance Law: filing, publication and comment dates for the Proposed Second Amendment to 11 NYCRR 163
- New York State Department of Financial Services, Insurance Circular Letter No. 3 (2026): Motor Vehicle Insurance Reforms (July 1, 2026)
- 11 NYCRR 163.4 as currently in effect, Cornell Legal Information Institute
- New York Insurance Law section 2350, flexible rating for nonbusiness automobile insurance policies (New York State Senate)
- New York Insurance Law section 2328, for hire motor vehicle insurance rates; flexible rating; prior approval (New York State Senate)
- Office of Governor Kathy Hochul, "Governor Hochul Announces New Regulation Proposed by the Department of Financial Services Increasing Transparency for Policyholders in the Auto Insurance Market" (September 9, 2026)
- Office of Governor Kathy Hochul, auto insurance reform proposal announcement (January 13, 2026)
- Insurance Journal, "New York Proposes Rule to Require Prior Approval of Auto Insurance Rate Hikes" (September 10, 2026)
- Spectrum News, "Hochul tells auto insurance companies to show their work in implementing changes" (July 1, 2026)
- Repairer Driven News, "New York auto insurance reform promises 10% savings" (June 1, 2026)