The primary function of the New York State Department of Financial Services (DFS) is to oversee the financial stability of insurance companies. Insolvency means a company does not have enough assets to pay all its financial obligations, including policyholder claims. When an insurer becomes insolvent, a state regulator will typically intervene to manage its assets and protect policyholders. DFS is failing miserably at its mission, and here is why: The American Transit Insurance Company (ATIC) is the largest insurer of for-hire vehicles (FHVs) in New York City. They gained a dominant market share by underpricing their insurance and under-reserving. ATIC insures approximately 60% of New York City’s FHV owners
In an Examination Report, the DFS determined that as of December 31, 2018, ATIC was insolvent in the amount of $637,775,436, and its capital was impaired in the amount of $638,775,436. Furthermore, the examination has determined that, as of December 31, 2019, the company was insolvent in the amount of $707,370,226, its capital was impaired in the amount of $708,370,226. Accordingly, approximately 60% of New York City’s FHV drivers are covered by a dangerously insolvent insurance company.
ATIC’s shortfall is substantial and represents an unsustainable trajectory that must be corrected by direct concrete action. DFS claims that over the years, it has repeatedly sought to engage ATIC to get the company to address its financial condition. For decades, the company has failed to address the issues identified by DFS. So, what has DFS done to address this looming crisis? The answer: Nothing.
The NYC Taxi & Limousine Commission (TLC) initially sought to promulgate a rule that logically required FHV insurers to be financially solvent for a FHV to be properly licensed by the TLC (“Initial Rule”). This makes sense because no FHV driver should be insured by an insurance company that does not have enough assets to pay all its financial obligations.
On February 4, 2025, the TLC submitted a Notice of Promulgation of a rule permitting the TLC to license any insurer that is approved by the Superintendent of Insurance and admitted in New York State (“Final Rule”). The TLC removed the language requiring insurance carriers licensed by the TLC to be solvent, despite having been aware since September 2024, at the very latest, that ATIC’s reserves are massively deficient.
The TLC provided next to no reasoning as to why it inexplicably changed course from its Initial Rule, thereby gutting the Initial Rule’s complete common-sense solvency conditions. The TLC’s final Rule is objectively baseless and irrational. Its unsupported change in position permits ATIC to continue offering insurance to New York City’s FHV drivers at impossibly and dangerously discounted rates.
Inshur, a commercial auto managing general agent, filed a lawsuit against the TLC in May 2025. In its Article 78 Proceeding, Inshur claims to have been artificially priced out of the FHV insurance market in New York City. Their lawsuit states that many of the non-admitted excess policies the TLC now prohibits are offered by companies that are highly rated by insurance credit raters, solvent, and promptly pay claims, carrying less risk to New York consumers than some admitted policies, such as those offered by ATIC. Inshur claims to have suffered harm by not being able to offer business to ATIC’s customers, despite ATIC’s inability to pay claims.
Inshur estimates that it has lost approximately $50,000,000 in business as a result of ATIC’s continued operation. From a legal perspective, Inshur’s lawsuit claims that the TLC’s rule – which only requires a FHV insurer to be admitted in New York and not financially solvent – was made in violation of lawful procedure, was affected by an error of law, was arbitrary and capricious, and was an abuse of discretion.
On August 6, 2025, the TLC, via the New York City Corporation Counsel’s office, filed a motion to dismiss Inshur’s lawsuit. The TLC claims that Inshur lacks standing because it has not alleged a concrete and particularized injury traceable to TLC’s final rule. And, even if Inshur had alleged a concrete harm attributable to TLC, Inshur’s purported injury (lost profits) is not within the zone of interest to be protected by the statutory provisions under which TLC has acted. Moreover, the TLC claims it does not regulate insurance carriers, is not responsible for establishing standards for solvency or monitoring carrier solvency and defers to DFS for such oversight. The adopted language provides more coverage flexibility for TLC-licensed vehicle owners and removes the need for Medallion and FHV owners to determine their carrier’s financial status.
Insur’s petition was submitted to New York State Supreme Court Justice Kathleen Waterman-Marshal on August 20, 2025. Now we all wait for a decision from the Court. Typically, an Article 78 Petition is a hard case to win because the Courts grant substantial deference to administrative agencies such as the TLC. Regardless of the outcome of the Inshur lawsuit, the fact remains that, by continuing to let ATIC operate when DFS knows ATIC does not have enough assets to pay all its financial obligations, DFS has abrogated its responsibility to the FHV industry and the riding public.
ATIC’s insolvency not only continues to this day but has even further deteriorated. On March 1, 2025, ATIC filed its statutory-basis Annual Statement with DFS, containing ATIC’s financial reporting for the 2024 fiscal year. The Actuary Statement reports, based on ATIC’s financial data as of December 31,2024, that ATIC currently has a policy surplus of negative $761,472,319.
The Actuary Statement additionally reports that “The Company’s total adjusted capital reported on their 2024 Annual Statement ($761,472,319) is below the $217,033,258 mandatory control level event’s threshold,” triggered when the insurer’s total adjusted capital is less than its mandatory control level risk-based capital.
New York’s Public Motor Vehicle Liability Security Fund (the “Security Fund”) was established to secure insurance benefits for New York’s injured parties. In the event that a New Yorker became injured and their insurance company could not pay all or a portion of the claim because of insolvency, the Security Fund was designed to pay the unpaid portion of that claim. ATIC’s insolvency is so profound that it dwarfs the Security Fund. DFS reported in its most recent annual report to the Governor that the Security Fund’s outstanding balance is a mere $57,519,826
While the TLC should not be making solvency determinations, DFS cannot permit insolvent insurance companies like ATIC to continue operating in the FHV insurance industry. The New York State Legislature has charged DFS and the Superintendent of Insurance with regulating insurance carriers operating in New York State.
DFS’s primary function is overseeing the financial stability of insurance companies. A company’s financial stability helps to assure the consumer that the company will be there to pay claims in the future. Under the current circumstances, the Superintendent of Insurance must seek an order from the New York State Supreme Court allowing the Superintendent to take over ATIC’s operations since they are, and have been, unstable for a prolonged period of time, with no relief or rescue in sight.
FHV insurance is not cheap, but FHV owner/operators must take steps to protect themselves by purchasing insurance from financially stable companies, not the cheapest. It is pertinent for FHV owners to be aware of the risks and take steps to protect themselves and the people who are entrusted to them to drive in the City of New York. No rational member of the riding public would take a trip in a FHV if they knew that the company that insures the vehicle they are in is insolvent.
ATIC is beyond rehabilitation. The Superintendent must liquidate ATIC and take steps toward the eventual dissolution of ATIC. To do otherwise would only further threaten FHV owners/operators, the FHV industry, and most of all, the riding public.
