New York Codes, Rules and Regulations
Title 11 - INSURANCE
Chapter V - Rates And Rating Organizations
Subchapter H - Noncommercial Insurance Merit Rating Plans
Part 169 - Noncommercial Motor Vehicle Insurance Merit Rating Plans
Section 169.0 - Preamble

(a) In order to achieve greater rating equity among noncommercial motor vehicle insureds, merit rating plans were introduced in New York. These plans are systems of rules, varying by company, for imposing insurance rate surcharges and credits, based upon an individual's past accident or violation record. Such plans, under various names, are now in use by virtually all noncommercial motor vehicle insurers in New York, although there is no statutory or regulatory requirement for insurers to utilize such plans.

(b) Chapter 70 of the Laws of 1980, among other things, required the Superintendent of Insurance to report to the Legislature and Governor by February 1, 1981 on the advisability of a uniform merit rating plan. The superintendent's report recommended that a variety of merit rating plans be permitted, subject to legislative and regulatory guidelines. The Legislature then enacted chapter 551 of the Laws of 1981, which added a new subdivision 4 to section 183-a, now section 2334 of the Insurance Law, requiring the superintendent to promulgate a regulation, after a public hearing, applicable to all noncommercial motor vehicle merit rating plans.

(c) The large diversity among merit rating plans, encouraged by the competitive rating statute, appears to be due to independent assessments by insurers of the circumstances which indicate that a driver may be more likely to be involved in future accidents. The differences among these plans illustrate that there is no known "best" plan or even a list of "best" features from the various plans. Insurance Law, section 2334 recognizes the value of competition as a source for innovation and experimentation in the search for "better" merit rating plans. The statute provides that the regulation:

(d) Insurers' merit rating plans are also subject to Insurance Law section 2335, which restricts the circumstances under which policy premiums for any motor vehicle insurance coverage may be increased. Chapter 277 of the Laws of 2010 amended Insurance Law section 2335 by prohibiting an insurer from imposing a premium increase for an accident where the property damage does not exceed $2,000.

(e) Chapters 9 and 287 of the Laws of 1995 permit insurers to establish multi-tier programs for noncommercial motor vehicles which conform with regulations promulgated by the superintendent. Part 154 of this Title established standards for multi-tier programs in which there is more than one rate level or tier in the same company and there is a complete rating system associated with each rate level or tier. That Part also provided that rules for initial tier placement and movement between tiers shall be mutually exclusive to the extent feasible. Accordingly, it is necessary to amend this Part to provide guidance with respect to the application of merit rating plans with regard to initial tier placement and movement between tiers.

(f) In this Part, the terms noncommercial private passenger automobile insurance policy, as used in section 2334 and noncommercial motor vehicle insurance policy, as used in section 2345 shall have the meaning of a covered policy of insurance as defined in section 3425(a)(1) of the Insurance Law and the term noncommercial motor vehicle insurance policy as used in this Part shall always mean a section 3425 covered policy.