NY State Senate Bill 2017-S3971

Senate Bill S3971

2017-2018 Legislative Session

Directs the special advisory panel on homeowners' insurance/catastrophe coverage to study certain facets of insurance in coastal areas

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Archive: Last Bill Status - In Senate Committee Insurance Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 03, 2018	referred to insurance
Jan 31, 2017	referred to insurance

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2017-S3971 (ACTIVE) - Details

See Assembly Version of this Bill:: A7469
Current Committee:: Senate Insurance
Law Section:: Insurance
Laws Affected:: Amd §12, Chap 42 of 1996; amd §23, Chap 136 of 2008
Versions Introduced in Other Legislative Sessions:: 2009-2010: S8110, A11486
2011-2012: S1027, A5215
2013-2014: S2338, A5312
2015-2016: S856, A6385

2017-S3971 (ACTIVE) - Summary

Directs the special advisory panel on homeowners' insurance/catastrophe coverage to study certain facets of profitability of insurance in coastal areas.

2017-S3971 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S3971

 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:

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-insurable 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
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 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 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, 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
Management, 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
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 15 years, 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 Hurricane Irene and 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 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 weather event.

 PRIOR LEGISLATIVE HISTORY :

2010:S.8110-Passed Senate; A.11486-Referred to insurance
2012:S.1027-Referred to Insurance Committee
2014:S.2338-Passed Senate.
2016:S.856-Remained in Senate Insurance Committee
 FISCAL IMPLICATIONS :

None.

 EFFECTIVE DATE :
Immediate.

2017-S3971 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   3971
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                             January 31, 2017
                                ___________
 
 Introduced  by  Sens.  KLEIN,  AVELLA,  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. Subdivisions 1 and 2 of section 12 of  chapter  42  of  the
 laws  of  1996 amending the insurance law relating to homeowners' insur-
 ance and a temporary panel on homeowners' insurance coverage, as amended
 by chapter 136 of the laws of 2008, are 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, [2009] 2018, and on [an annual] A BIENNIAL basis
 thereafter:
   (a) a review of INTERNATIONAL, FEDERAL 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;
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD09368-01-7

 S. 3971                             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[.];
   (J) AN EVALUATION OF WHETHER AND THE 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,  AND  THE REASONS FOR ANY SUCH ACTIONS. FURTHER, THE PANEL
 SHALL STUDY AND ASCERTAIN AN AVERAGE ESTIMATED COST OF OBTAINING  COMPA-
 RABLE  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; AND
   (K) AN EVALUATION OF STATE AND LOCAL MUNICIPAL NATURAL DISASTER  MITI-
 GATION  PLANS, AS PROVIDED FOR IN ARTICLE TWO-B OF THE EXECUTIVE LAW, AS
 THEY RELATE TO MINIMIZING PROPERTY DAMAGE TO RESIDENTIAL HOMES IN  COAS-
 TAL  AREAS  OF THE STATE AND SUGGEST WAYS TO MINIMIZE INSURABLE AND NON-
 INSURABLE RESIDENTIAL HOME  LOSSES  DUE  TO  SUCH  CATASTROPHIC  NATURAL
 DISASTER EVENTS.
   (2)  The panel shall consist of [twenty-three] TWENTY-SIX members. The
 superintendent of [insurance] FINANCIAL SERVICES shall be the  chair  of
 the  panel.  The  other  [twenty-two]  TWENTY-FIVE  members shall be THE
 DIRECTOR OF THE STATE EMERGENCY MANAGEMENT OFFICE, THE STATE CHIEF  RISK
 OFFICER,  THE DIRECTOR OF RISK AND INSURANCE MANAGEMENT OF THE OFFICE OF
 GENERAL SERVICES, AND  TWENTY-TWO  MEMBERS  appointed  as  follows:  six
 members shall be appointed by the governor, of whom two shall be experts
 in the field of catastrophic meteorological science, two shall be build-
 ing  or  code  enforcement  officials and two shall be representative of
 insurance consumers; six members shall be  appointed  by  the  temporary
 president  of  the  senate,  of  whom  three  shall be representative of
 producers actively placing homeowner's insurance policies in this state,

 S. 3971                             3
 
 two shall be representative  of  insurance  companies  actively  writing
 homeowner's  insurance policies in this state and one shall be represen-
 tative  of  insurance  companies  providing  reinsurance  coverage;  six
 members shall be appointed by the speaker of the assembly, of whom three
 shall be representative of producers actively placing homeowner's insur-
 ance  policies in this state and three shall be representative of insur-
 ance companies actively writing homeowner's insurance policies  in  this
 state; and two members each shall be appointed by the minority leader of
 the  senate  and  the  minority  leader of the assembly, provided of the
 members appointed by each minority leader one shall be representative of
 producers actively placing homeowner's insurance policies in this  state
 and  one shall be representative of insurance companies actively writing
 homeowner's insurance policies in this state.  Each member of the  panel
 shall serve at the pleasure of the official who appointed him or her.
   §  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, as further amended by section 104 of part A of  chapter  62
 of the laws of 2011, is amended to read as follows:
   (a) The superintendent of financial services shall implement a program
 designed  to  attract more competitors to the state's homeowners' insur-
 ance market PARTICULARLY WITH RESPECT  TO  THOSE  COMMUNITIES  THAT  ARE
 WITHIN  ONE  MILE OF A SALTWATER OCEAN, SOUND, INLET OR BAY IN THE COUN-
 TIES OF THE BRONX, KINGS, NASSAU, QUEENS, RICHMOND,  SUFFOLK  AND  WEST-
 CHESTER.  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.
   § 3. This act shall take effect immediately.

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Senate Bill S3971

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Sponsored By

Jeffrey D. Klein