A state-mandated catastrophe fund is not needed in New York, according to the American Insurance Association (AIA).
“The creation of a catastrophe fund in New York State is not warranted. The creation of such a fund would cause New Yorkers living in non-coastal areas of the state to subsidize those homeowners who choose to live in the areas more at risk from hurricanes,” said Gary Henning, AIA assistant vice president, Northeast Region in testimony before a New York Assembly hearing this week on disaster preparedness. “A CAT fund also would have the potential of raising premiums for non-homeowners insurance policies across New York state.”
The hearing was held by the Assembly Committee on Local Governments and the Committee on Governmental Relations.
“A state-mandated fund might be justified if there was an availability and affordability crisis in the New York state homeowners’ insurance market, but there isn’t. The homeowners’ market is healthy,” added Henning.
“AIA believes that any government-run reinsurance mechanism should not displace private-sector capacity. Private reinsurance markets for natural disasters appear to be abundant, and prices are stable. In fact, almost $19 billion of new reinsurance capital has entered the marketsince Hurricane Katrina,” said Henning.
He also stressed that maintaining and enforcing New York’s strong building code to prevent wind damage during storms is critical.
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