Thursday Headlines: Insurance Who Insurance Why Edition - Streetsblog Empire State

"Part of the issue is the black box that is insurance. The state Department of Financial Services helps set rates for companies operating in New York, but on a granular level, companies use proprietary algorithms and metrics to set premiums."

"If state policies lower costs for insurance companies, then they should have excess profits to return to policyholders and justify policy reductions. But as corporations, their fiduciary duty is to create a return for shareholders rather than value for customers."

"But for other companies, the state is in a position to say they make too much money - specifically, an average rate of return on net worth of more than 21 percent over six years - and could force them to return a share of profits to policyholders."

New York state lawmakers are expressing skepticism about Governor Hochul's auto insurance proposal, questioning whether it truly benefits New York consumers. The state Department of Financial Services helps set insurance rates, but companies use proprietary algorithms to determine individual premiums. Insurance companies in New York have achieved average returns on net worth exceeding 21 percent over six years. The state has the authority to require insurance companies to return excess profits to policyholders, though this has never occurred. Lawmakers worry the proposal primarily benefits insurance companies and ride-share services rather than consumers, while stripping crash victims' legal rights. Unlike mutual companies such as State Farm, most insurers prioritize shareholder returns over customer value.

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