Agents offer remedies as N.Y. coastal market worsens

News Currents

New York’s already difficult coastal insurance market isn’t getting any easier, according to agents. Insurance companies, however, claim the market is fine.

Agents are hoping lawmakers take some action, while insurers have been urging them to refrain from intervening in the market.

The chair of the Independent Insurance Agents and Brokers of New York Inc. told lawmakers he is “deeply concerned” about insurance companies limiting homeowners coverage in the state’s coastal region. Testifying at a recent Senate Insurance Committee hearing, IIABNY Chair Stephen R. Zogby maintained that insurance cancellations and nonrenewals in Westchester County, New York City and Long Island are making it difficult for consumers trying to find adequate coverage,

The Professional Insurance Agents of New York State Inc. also urged action in the face of what it says is a tightening coastal insurance market, particularly on Long Island.

“Members tell us that the market for property insurance near the shore continues to be extremely difficult,” PIANY past President N. Stephen Ruchman told the committee.

PIANY’s Ruchman said his group conducted interviews with selected Suffolk County agents who confirm that the situation remains difficult for people with homes near the water. Insurance coverage generally can be obtained, but it is not usually available from standard companies, he said.

Zogby and Ruchman called on the Legislature to make permanent the residual insurer, the New York Property Insurance Underwriting Association. “Although it was formed to protect urban property in times of civil unrest, NYPIUA now has become an important safeguard for many with properties on barrier islands and along the shore. There is a permanent need for this market, and it is senseless to keep NYPIUA on a sunset basis,” Ruchman maintained.

Zogby encouraged regulators to recognize insurers’ use of computer catastrophe models in rate-making; standardize the triggers for activation of windstorm deductible clauses; and give insurers greater flexibility in rate changes. “We need to find new markets and capital for New York State and assist insurance companies through regulatory and legislative channels,” Zogby said, “making our state an attractive place to invest underwriting capital.”

The agents also say the state should improve the Coastal Market Assistance Program, with PIANY also urging that the “export list” be amended to add coastal homeowners and comprehensive personal liability insurance.

PIANY said that only about one-out-of-10 of its members is using CMAP for coastal risks. “There is a lack of understanding about how the program works, including among agents and agency staff; not enough companies are participating in the program; and agents are wary of coverage gaps that can occur with CMAP wrap-around policies,” Ruchman said.

Insurers of the American Insurance Association said the current market is “largely healthy” and public policymakers should concentrate on fostering competition and mitigating potential losses.

“Homeowners’ insurance has been and should continue to be available to downstate homeowners. Any governmental efforts to address availability in the homeowners’ insurance market should focus on fostering greater competition, attracting new capital to the market, and creating a regulatory environment that allows insurers to manage their catastrophic exposures,” said James J. Whittle, AIA assistant general counsel.

He also told the panel that maintaining strong building codes and incentives for homeowners to retrofit their properties for hurricanes would be beneficial.

The insurers oppose a proposal to require them to submit a withdrawal plan when non-renewing four percent of their writings in a single territory.

“This is a bad idea, it is a barrier to exit that will act as a barrier to entry and expansion,” said Whittle of the so-called “four percent legislation.”