Amd §12, Chap 42 of 1996; amd §23, Chap 136 of 2008
Directs the special advisory panel on homeowners' insurance/catastrophe coverage to study certain facets of profitability of insurance in coastal areas.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A7469
SPONSOR: Thiele TITLE OF BILL: An act to amend chapter 42 of the laws of 1996 amend-
ing the insurance law relating to homeowners' insurance and a temporary
panel on homeowners' insurance coverage, in relation to the special
advisory panel on homeowners' insurance/catastrophe coverage; and to
amend chapter 136 of the laws of 2008 amending the insurance law relat-
ing to extending the effectiveness of certain stand-by powers of the New
York property insurance underwriting association, in relation to the
program designed to attract more competitors to the homeowners' insur-
ance market
PURPOSE OR GENERAL IDEA OF BILL:
The purpose of this bill is to expand the charge of the already existing
Temporary Panel on Homeowners' Insurance coverage (the Panel) to:
A) Devote particular attention to the market dynamics in the coastal
homeowners' insurance market and to review international and federal
legislation, in addition to state legislative activities regarding
catastrophe related insurance coverages.
B) Evaluate State and Local Municipal Natural Disaster Mitigation Plans,
as it relates to minimizing property damage to residential homes in
coastal areas and suggest ways to help minimize insurable and non-insur-
able residential home losses due to a catastrophic natural disaster.
Helping to minimize insurable losses will help to stabilize homeowners
premium insurance rates before and after a catastrophic event has hit
our coastal areas.
With the advent of Hurricane Irene and Superstorm Sandy, the Financial
Services Department should expand upon the number of tasks taken on by
the Temporary Panel on Homeowner's Insurance to ensure that the homeown-
ers market remains competitive and that consumers have more than one or
two alternatives '(if they have any alternatives at all) for obtaining
homeowners' insurance, particularly if such homeowner's policy is
canceled by their current insurance carrier.
SUMMARY OF SPECIFIC PROVISIONS:
Section 1: Amends Chapter 42 of the Laws of 1996 to expand the charge of
the Panel to include: A) reviewing international and federal legislative
activities, in addition to state legislative activities, related to
catastrophe related insurance coverages and the availability of federal
stop loss funds, and federal reconstruction & infrastructure financial
aid packages, B) evaluating the effectiveness of the voluntary market
assistance program with particular attention devoted to market dynamics
in the coastal homeowners insurance market, C) evaluating the govern-
mental capacity, such as state & local governments and special
districts, to anticipate and plan for a catastrophic weather event and
to increase the effectiveness of their efforts to respond to a
catastrophic weather event and to mitigate potential infrastructure and
Property/Casualty damages and loss, D) looking into the estimated cost
of obtaining comparable homeowners' insurance if their previous coverage
has been cancelled, and E) evaluating state and local municipal natural
disaster mitigation plans with an eye to minimizing property damage to
residential homes to help stabilize the cost of homeowners' insurance.
In addition, the Task Force membership would be expanded to include the
Director of the State Emergency Management Office (SEMO), the State
Chief Risk Officer, and the Director of the Risk and Insurance Manage-
ment, within the Office of General Services.
Section 2: Amends section 23 of Chapter 136 of the Laws of 2008 to
encourage the Superintendent of Insurance Financial Services to seek to
new ways to identify new insurance carriers that may want to write home-
owners' insurance in the State's coastal areas to help replace those
carriers that are slowing withdrawing from this market. Encouraging
more private carriers to write coastal homeowners' insurance should help
to increase the availability of coastal homeowners' insurance and give
consumers more choice in this tightening market.
JUSTIFICATION:
For more than 15 years, some of New York's largest homeowner insurance
carriers have been either gradually withdrawing or curtailing the issu-
ance of new policies in the coastal homeowner's insurance market. While,
due to national trends related to excess liability exposure in coastal
areas, it is prudent for some of these larger carriers to reduce their
liability exposure in coastal areas, it is important that New York home-
owners are able to access a variety of insurance products at affordable
prices to cover their diverse homeowners insurance and protection needs.
This goal of expanding consumer choice and securing the ability to
obtain affordable homeowners coverage from more than just a few insur-
ance carriers (or no carrier at all) or obtaining homeowners insurance
from the New York Property Insurance Association (NYPIA) has been
heightened in light of the occurrence of Hurricane Irene and Superstorm
Sandy.
This bill expands the scope of the Panel to ensure that the Financial
Services Department has sufficient information so that the Department
can help to encourage other insurers to expand writings in this area or
to enter the coastal homeowners insurance market to replace, in an
orderly manner, those who are withdrawing from the market. Under current
law, insurers are required by law to notify the State Financial Services
Department of their plans to withdraw from the market and to file a
withdrawal plan. Further, insurers are encouraged to take steps to
ensure that their departure from this segment of the market is conducted
in an orderly manner to minimize the disruption that i.e. sure to be
caused by so many homeowners scrambling to secure replacement coverage.
This bill expands the scope of the Panel so that the insurance industry
(including insurance agents, brokers and carriers in both the admitted
and non-admitted market, and reinsurers), in cooperation with the
Department, and state & local governments can create an environment that
encourages more writings of homeowners insurance in the State's coastal
areas.
This bill is particularly important today, as the market dynamics of the
homeowners insurance market has changed due to the catastrophic losses
sustained by coastal residents by Superstorm Sandy. This bill memo was
revised in 2013 to heighten the need to enact this bill into law in
light of the events of Superstorm Sandy. It was further amended in 2014
to revise the dates to be used in preparing reports pursuant to this
bill so that they would be done at a later date. The bill was revised
again in 2017 to add new members to the Task Force who are familiar with
and review State and local municipal natural disaster mitigation plans
as provided for under Executive Law Article 2-B. These plans are
utilized to minimize property damage losses due to a catastrophic weath-
er event.
PRIOR LEGISLATIVE HISTORY:
2010: S.8110/A.11486
2012: S.1027-8/A.5215-8
2014: S.2338/A.5312
2016: S.856/A.6385
FISCAL IMPLICATIONS:
None.
EFFECTIVE DATE:
Immediate.
