Editorial: Gov. Paterson should veto insurance bill

New York’s auto insurance rates, already the second highest in the land, are likely to go higher still if a bill that surfaced and was passed in the waning hours of this year’s legislative session gets signed into law.

The bill would allow insurers to raise rates as much as 5 percent without the approval of the state Insurance Department. While that doesn’t sound too extreme, the 5 percent limit would be a statewide average: insurers would have considerable leeway to adjust rates up or down considerably more than that amount as long as the average doesn’t exceed 5 percent.

Thus motorists living in certain high-risk communities could see their rates skyrocket, but the increases would be allowable as long as they were offset by modest reductions in a greater number of relatively low-risk neighborhoods.

Insurers claim this flexibility, offered in many states, will make the New York market more attractive, and that if more insurers are willing to insure here, rates overall will go down. That may be true, but it will still be cold comfort for the people in those marginal neighborhoods whose rates, through no fault of their own except where they live, get raised substantially. Shouldn’t there be some sort of limit to how much anyone’s rates can go up?

This may or may not be the direction New York wants to go on auto insurance, but one thing’s for sure: Before a change of such significance is made, it deserves to be discussed more openly. This bill came up out of the blue last week and was passed, without debate, just hours before the end of session.

Gov. Paterson should veto the bill and force lawmakers to do it over, out in the open.