Directs the special advisory panel on homeowners' insurance/catastrophe coverage to study certain facets of profitability of insurance in coastal areas.
BILL NUMBER:S2338 REVISED 1/30/13
TITLE OF BILL: An act to amend chapter 42 of the laws of 1996 amending 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 relating 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' insurance 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 devote particular attention to the market dynamics in the coastal homeowners' insurance market and to review federal legislation, in addition to state legislative activities regarding catastrophe related insurance coverages. With the advent of Super-storm 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 homeowners 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 136 of the Laws of 2008 to expand the charge of the Panel to include: A) reviewing 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 governmental 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, and D) looking into the estimated cost of obtaining comparable homeowners' insurance if their previous coverage has been cancelled.
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 homeowners' 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 a decade, some of New York's largest homeowner insurance carriers have been either gradually withdrawing or
curtailing the issuance 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 homeowners 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 insurance 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 Super-storm 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 may very well change due to the catastrophic losses sustained by coastal residents by Super-storm Sandy. This bill memo was revised in 2013 to heighten the need to enact this bill into law in light of the events of Super-storm Sandy.
PRIOR LEGISLATIVE HISTORY: 2010: 5.8110 - Passed Senate; A.11486 -Referred to Insurance 2012: S. 1027 - Referred to Insurance Committee
FISCAL IMPLICATION: None.
EFFECTIVE DATE: Immediate.
STATE OF NEW YORK ________________________________________________________________________ 2338 2013-2014 Regular Sessions IN SENATE January 16, 2013 ___________Introduced by Sens. KLEIN, BRESLIN, SAVINO -- read twice and ordered printed, and when printed to be committed to the Committee on Insur- ance AN ACT to amend chapter 42 of the laws of 1996 amending the insurance law relating to homeowners' insurance and a temporary panel on home- owners' 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 relating to extend- ing the effectiveness of certain stand-by powers of the New York prop- erty insurance underwriting association, in relation to the program designed to attract more competitors to the homeowners' insurance market THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivision 1 of section 12 of chapter 42 of the laws of 1996 amending the insurance law relating to homeowners' insurance and a temporary panel on homeowners' insurance coverage, as amended by chapter 136 of the laws of 2008, is amended to read as follows: (1) The superintendent of
[insurance]FINANCIAL SERVICES is hereby directed to convene a special advisory panel on homeowners' insurance/catastrophe coverage, to examine and assess the problems affecting the availability and affordability of homeowners' insurance in this state and the effect thereon created by any potential major weather catastrophe. The panel shall study and report on the following issues on or before November 30, 2014, and on an [annual]BIENNIAL basis thereafter: (a) a review of FEDERAL LEGISLATION AND other states' activities regarding catastrophe related coverage, including but not limited to an evaluation of the experience under the California Earthquake Authority and the Florida [Commission on Hurricane Loss Projection Methodology]HURRICANE CATASTROPHE FUND;EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD06594-01-3 S. 2338 2
(b) an evaluation of the effectiveness of any voluntary market assist- ance program in effect in New York WITH PARTICULAR ATTENTION DEVOTED TO MARKET DYNAMICS IN THE COASTAL HOMEOWNERS' INSURANCE MARKET; (c) an evaluation of the feasibility or experience, if any, of the New York property insurance underwriting association writing homeowners' insurance policies or reinsuring such policies when written in the voluntary market under certain market conditions; (d) an evaluation of the feasibility of the New York property insur- ance underwriting association issuing bonds or establishing other finan- cial mechanisms for catastrophe insurance coverage; and an evaluation of the feasibility of establishing a state-wide catastrophe insurance fund; (e) an evaluation of the feasibility of the New York property insur- ance underwriting association acting as a servicing carrier for policies written pursuant to parts 61 and 62 of title 44 of the Code of Federal Regulations; (f) an evaluation of existing state and local building codes and the feasibility of implementing new building practices and structural improvement retrofitting, to mitigate damage from a major weather catas- trophe; (g) an evaluation of insurer AND GOVERNMENTAL capacity and effective- ness in the event of a catastrophic weather occurrence, including rein- surance capacity and effectiveness, windstorm deductibles and multi-tier programs, AND OTHER RISK SHARING MECHANISMS; (h) an evaluation of insurer preparedness in the recovery, rebuilding and renewal processes following weather-related losses;
[and](i) an evaluation of public awareness of storm risks and programs to educate the public of storm risks and mitigation techniques [.]; AND (J) AN EVALUATION OF THE REASONS WHY AND RATE AT WHICH INSURERS MAY BE WITHDRAWING FROM THE COASTAL HOMEOWNERS' INSURANCE MARKET, CANCELLING SUCH POLICIES OR SUBSTANTIALLY INCREASING INSURANCE PREMIUM RATES IN SUCH MARKET. FURTHER, THE PANEL SHALL STUDY AND ASCERTAIN AN AVERAGE ESTIMATED COST OF OBTAINING COMPARABLE REPLACEMENT HOMEOWNER'S COVERAGE FOR THOSE INSUREDS WHO HAVE BEEN CANCELLED IN SUCH COASTAL AREAS. FOR THE PURPOSES OF THIS SUBDIVISION, THE TERM COASTAL HOMEOWNERS' INSURANCE MARKET SHALL MEAN THOSE AREAS THAT ARE WITHIN ONE MILE OF A SALTWATER OCEAN, SOUND, INLET OR BAY IN THE COUNTIES OF THE BRONX, KINGS, NASSAU, QUEENS, RICHMOND, SUFFOLK, AND WESTCHESTER. S 2. Subdivision (a) of section 23 of chapter 136 of the laws of 2008 amending the insurance law relating to extending the effectiveness of certain stand-by powers of the New York property insurance underwriting association, is amended to read as follows: (a) The superintendent of [insurance]FINANCIAL SERVICES shall imple- ment a program designed to attract more competitors to the state's home- owners' insurance market PARTICULARLY WITH RESPECT TO THOSE COMMUNITIES THAT ARE WITHIN ONE MILE OF A SALTWATER OCEAN, SOUND, INLET OR BAY IN THE COUNTIES OF THE BRONX, KINGS, NASSAU, QUEENS, RICHMOND, SUFFOLK, AND WESTCHESTER. The program shall include, but shall not be limited to: (1) identifying, contacting and soliciting feedback from national, regional and other insurance carriers not currently writing homeowners insurance in the state to determine their interest in selling homeowners insurance in the state; (2) adopting specific measures to encourage such insurers to sell homeowners' insurance in the state; and (3) documenting those issues or concerns such insurers may cite as barriers to selling homeowners insurance in the state. S 3. This act shall take effect immediately.