Survey of Agents Finds No Immediate Crisis in N.Y. Homeowners Market

February 28, 2006

The Professional Insurance Agents of New York State Inc. reported that a week-long survey of its members regarding the current conditions of the homeowners market in downstate New York found there is no immediate crisis in availability in the area.

Based on these findings, N. Stephen Ruchman, immediate past president of PIANY, testified before the New York State Insurance Department that a degree of competition exists in most areas.

However, he noted that Allstate’s recent intentions to withdrawal from the market could potentially undermine what is a currently stable situation.

PIANY shared with the NYSID the finding of its recent survey of the current conditions downstate and in coastal areas.

“Our information suggests that, at this point in time the homeowners market in the downstate area remains adequate to handle the current level of new business,” said Ruchman. “We stress that this data captures a certain window in time and conditions may change, especially if a large number of nonrenewals start to occur. We hope the department will do everything in its power to limit the number of nonrenewals that take place.”

More than 65 agencies, of which 12 were Encompass (Allstate’s agency company) agents and one was an Allstate agent, provided homeowners market data during PIANY’s survey. Eighteen of the agencies were located in Nassau County; 16 in Suffolk County; 23 in the New York City counties (Bronx, New York, Richmond, Kings and Queens counties); and nine in Westchester County.

“In all areas, nearly every agency that responded has multiple companies writing new homeowners business for them,” said Ruchman. “All the Encompass agencies and even the Allstate agent said they have at least one or more often multiple companies writing new homeowners business for them.”

When asked how many insurance companies write new homeowners business for the agencies, the average number of homeowners markets ranged from 2.9 for Suffolk County agents, to 3.3 for Nassau County agents and 3.5 for New York City agents, to 5.1 for Westchester County.

PIANY also asked about the changes in market conditions during the past year and, while the response varied by area, some insurance agents reported an increase in competition. However, among Nassau and Suffolk County agents, a greater than 2-to-1 majority said there is less competition now, compared to a year ago. Only in Westchester County did a majority, 4-to-1 say competition is greater this year than last.

The survey asked about the changes in the number of PIANY members’ homeowners insurance companies over the past year. The answers followed the same trend as market competition, with more agencies losing than gaining companies in all but Westchester County, where there was an even split. In Suffolk County, only one member picked up markets, while 10 have fewer markets.

When asked what their other insurance companies’ responses have been to Allstate and Encompass’ announcements, only in Westchester County does there seem to be significant interest by competitors in acquiring these companies’ homeowners business. On Long Island the overtures to pick up these companies’ business virtually are nonexistent.

This trend, combined with the trends toward less competition and fewer carriers reported in Nassau and Suffolk counties, are not good signs, according to PIANY. In other areas, the most frequent response was that the companies plan to continue writing new business for their agents.

When rating market availability of coastal homeowners, Suffolk County agents rated availability the tightest at 4.0; followed by Nassau County at 3.7; New York City at 3.6; and Westchester County at 3.1. The rating scale was “1—highly competitive” to “5—impossible to place, except in a residual market.”

PIANY asked insurance agents about homeowners business that is “close to the water,” and how frequently agents can place this with one or more of their regular companies. Suffolk County chose “never” as their most frequent answer, while agents in the other counties responded that they can “sometimes” place such risks in the voluntary market.

For homes “close to the water,” PIANY asked agents if they ever use either NYPIUA or the excess line market. Consistent with other results, Suffolk County agents are most likely to use NYPIUA and Westchester County agents are the least. Agents in both Suffolk and Nassau counties commented that they use the CMAP program with wraparound policies providing the coverages that are lacking in NYPIUA.

The survey also found that agents in Suffolk and Nassau counties are far more likely to use excess line companies than those in New York City or Westchester County for homes “close to the water.”

“While not sounding a dire warning, we think it is plain that some stress is evident, particularly on Long Island,” said Ruchman.

Source: PIANY

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