The Metropolitan Transportation Authority said on Friday that auto insurance changes that Gov. Kathy Hochul is seeking could save the agency nearly $50 million a year in car-crash litigation — money that could help pay for better bus and subway service.
“Money we should be spending on great service is going to payoffs to well-connected billboard lawyers instead,” said Janno Lieber, the chief executive of the M.T.A. “Guys who actually think the M.T.A. is spelled A.T.M.”
Mr. Lieber, who joined Ms. Hochul at a bus depot in Harlem, said the city’s roughly 6,000 buses are often implicated in traffic collisions in which the bus drivers are not at fault, but the agency is nevertheless targeted, because personal injury lawyers know the agency can pay.
Ms. Hochul said that fraudulent insurance claims have surged since 2020, pushing up the cost of coverage for both individuals and transit agencies. “There are criminals out there trying to scam the system, and it has to stop,” she said.
The M.T.A. said it had spent $227 million on insurance claims involving city buses last year. Officials estimate that the new insurance rules would reduce that sum by 10 percent, or nearly $23 million, and allow the agency to reallocate another $25 million for other priorities, Mr. Lieber said.
These savings are relatively small for the M.T.A., which has a $21 billion annual operating budget and is slated to spend $68 billion over the next several years on capital projects.
But the savings could still help improve service, Mr. Lieber said. The agency is spending about $35 million a year on a bus redesign plan in Queens to speed up service.
Marie Therese Dominguez, the commissioner of the State Department of Transportation, said the changes could save about $25 million a year combined for other transit agencies.
Ms. Hochul, who is seeking re-election this year, has touted auto insurance reform as a major part of her effort to lower the cost of living for everyday New Yorkers.
Drivers in the state pay some of the highest premiums in the country, which climbed to an average of $1,896 a year in 2023, 32 percent above the national average, according to the Citizens Budget Commission, a fiscal watchdog group.
If New York were to make reforms similar to those passed in other high-cost states, insurance premiums could shrink 10 percent, saving the average driver about $200 a year per vehicle, the commission said.
These auto insurance proposals will be a priority for Ms. Hochul as she negotiates with Legislative leaders over the state budget, which is due by the statutory deadline of April 1, though the talks often stretch well past then.
The insurance reforms face skepticism from a broad mix of trial lawyers, street-safety advocates and state lawmakers who are either unconvinced that the new rules would save the average driver money, or are concerned that the changes could leave crash victims with insufficient compensation.
Victims who were uninsured, impaired or committing a felony would be limited to $100,000 in compensation for pain, suffering and emotional distress. Drivers who went to trial and were found to be more than 51 percent at fault would not be able to ask for more than the $50,000 offered under no-fault coverage.
Supporters of the plan say reforms are necessary to crack down on a spate of staged car crashes. But critics say the effort would largely benefit big corporations. The ride-sharing company Uber has already committed $5 million to the Citizens For Affordable Rates PAC, which is leading a lobbying push for the insurance reforms.
“This is just a trickle-down economics argument that they’re making,” said Peter Beadle, a personal injury lawyer and safe-streets advocate.
Andrew Finkelstein, president of the influential New York State Trial Lawyers Association, said Ms. Hochul was doing the bidding of big tech companies and pushing costs onto the public health system.
“The simplest way for the M.T.A. to save money is to invest in safety and proper training,” he said.
The M.T.A.’s endorsement of the insurance proposals comes as the governor is trying to win support for the plan from powerful labor groups. Ms. Hochul last month pulled back on a plan to allow driverless robotaxis to pick up passengers outside of New York City, partly because several unions and worker groups oppose the use of autonomous vehicles.
Two prominent labor groups — one representing ride share drivers and another representing commercial drivers — have backed Ms. Hochul’s insurance reform plan in written statements.
“The governor’s tireless efforts in confronting skyrocketing insurance costs and fraud abuse will do much to keeping our members employed and on the road,” said Thomas Gesualdi, president of Teamsters Joint Council 16, which also includes public housing workers and construction workers, among those in other industries.
Brendan Sexton, president of the Independent Drivers Guild, said these changes would be a great help to Uber and Lyft drivers.
But other labor groups, including the Transport Workers Union, which represents bus workers and other employees of the M.T.A., has yet to offer its support for the insurance changes.
“No comment,” said John Samuelsen, the union’s international president and a frequent critic of the governor.
Stefanos Chen is a Times reporter covering New York City’s transit system.
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