New York Gov. Kathy Hochul has signed legislation that should make it easier for nonprofit groups to find auto insurance coverage through risk retention groups.
Assembly Bill 5718 and its companion Senate bill allows out-of-state risk retention groups, starting in January, to write policies for nonprofits. For the most part, insurance companies have been unwilling to provide the auto coverage, especially for car-sharing services, which has created hardships for some groups that have fleets of transport vehicles, said the Nonprofits Insurance Alliance, a retention group based in California.
“This signing represents a major victory for the entire nonprofit sector,” the Alliance said in a statement Wednesday.
The need for change was highlighted by the plight of Ithaca Carshare, New York’s only nonprofit car-sharing service, which provides access to vehicles for people who need one. The organization was insured by Philadelphia Insurance, which left the market in May 2023, according to news reports.
Ithaca Carshare found another insurer, a risk retention group, but it was based in Vermont. New York law has required RRGs to be domiciled in the Empire State. The lack of coverage forced Ithaca to suspend operations this year but now it plans to restart in March 2024.
“By passing this legislation, we’re ensuring that Ithaca Carshare and similar not-for-profits can access the essential automobile insurance they need to remain open, flourish, and provide customers with critical access to transportation,” the governor said in a statement.
Risk retention groups are not unlike credit unions or captive insurance plans, and are owned by their members. Unlike insurance carriers, they do not need to be licensed in every state they operate in and do not need to participate in insolvency guaranty programs.
The groups have met with some resistance in a few other states. In Florida this year, for example, a bill requiring RRGs to maintain strong financial ratings came close to passing. The House approved the bill. But after stiff opposition from the National Risk Retention Association and some small businesses, the measure died in a Senate committee.
Topics New York
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