BILL NUMBER:S5034

TITLE OF BILL:  An act to amend the insurance law, in relation to
limiting the scope of an insurer's reduction of insurance coverage by
limiting the volume of notices of intention to not renew or condition
renewal to four percent of the total number of covered policies of
such insurer's rating territory; and in relation to establishing
standards for definitions contained within such law; and to repeal
certain provisions of the insurance law relating thereto

PURPOSE:

To limit an insurer's reduction of coverage by limiting the volume of
notices of intention to four percent, establishes standards for
definitions; repealer.

SUMMARY OF PROVISIONS:

Section 1 requires that a plan be filed with the superintendent if an
insurer plans to reduce the net number of homeowners insurance
policies within any such insurer's rating territory in use in this
state by 20% or reduce the net number of such policies it writes by
five hundred, within 5 years, whichever is greater. A plan shall also
be required to be filed with the superintendent when an insurer plans
to reduce the net number of such policies it has in force in a twelve
month period within any such insurer's rating territory in use in this
              

state by 4% or more or the net number of such policies it writes by
one hundred, whichever is greater.

Section 2 of the bill repeals section 5412(g) of the Insurance law,
thereby making NYPIUA permanent.

JUSTIFICATION:

Section 1. Currently an insurer may withdraw its homeowners' insurance
coverage from an entire region of New York State without approaching
the threshold requiring them to file a plan with the superintendent of
insurance. This legislation would limit the amount an insurer could
reduce its coverage of homeowners insurance policies to no more than
20% over five years or no more than 4% over twelve months per rating
territory in use in this state.

Section 2. NYPIUA, a joint underwriting association made up of
insurers writing property insurance in New York, affords the following
coverages to commercial and residential policyholders unable to obtain
such coverage in the voluntary market: fire and extended coverage
(such as windstorm); vandalism and malicious mischief; sprinkler
leakage; loss of rent; and business interruption insurance.

NYPIUA has served as a vital economic safety net in New York, taking
in a surge of new policies for properties in New York's coastal areas
in the mid-1990's. More recently, NYPIUA has seen growth in new
commercial policies, as it has become difficult for some businesses to
obtain coverage in the voluntary market. More than 50,000 homeowners
and 7,000 businesses currently insure their properties in NYPIUA.


Chapter 220 of the laws of 1986 added a new Insurance Law Section 5412
to NYPIUA's authorizing statute granting standby powers to the
Association to write commercial risk insurance, public entity
insurance and professional liability insurance. The Association will
write these coverages only if the superintendent determines, after a
public hearing, that it is necessarily due to the unavailability of
meaningful coverage in a particular voluntary market. Chapter 42 of
the Laws of 1996 added homeowners' insurance to the coverages NYPIUA
could be activated to write. It is important that NYPIUA be made
permanent and that the superintendent's ability to invoke this
authority be preserved to ensure the availability of insurance when
restrictive market conditions arise.

The temporary nature of NYPIUA has precluded it from drawing on
resources such as letters of credit, or a line of credit to ensure a
ready cash flow should a catastrophic situation require an immediate
response.

LEGISLATIVE HISTORY:

2011-12 S.2681;
2010 S.7879

FISCAL IMPLICATIONS:

None.

EFFECTIVE DATE:

This act shall take effect on the first of January next succeeding the
date on which it shall have become a law.