N.Y. Agents Decry Failure to Make Back-Up Property Insurer Permanent

July 7, 2006

The New York State Legislature once again missed an opportunity to help calm a growing homeowners insurance crisis in the downstate region, according to the state’s insurance agents.

With insurance companies such as Allstate, MetLife and others restricting and even canceling homeowners coverage in Westchester County, New York City and Long Island, the Independent Insurance Agents & Brokers of New York, Inc. says lawmakers could have eased the situation by permanently extending the life of the residual market property insurer.

However, as they have done in years past, lawmakers only granted the New York Property Insurance Underwriting Association a one-year extension.

In effect since 1968, NYPIUA provides fire, vandalism and other coverage to those who cannot obtain them in a standard market. The uncertainty over the future of the NYPIUA has consequences that are felt in the marketplace, agents maintain.

“The financial markets do not take NYPIUA seriously due to its temporary status,” said Sharon H. Emek, IIABNY chair and a managing director of CBS Coverage Group in New York City. “Because of its dependence on the New York State Legislature, NYPIUA has lapsed in the past, making it unable to obtain certain financial commitments.”

For years, NYPIUA has been a political hostage between the Republican-controlled New York Senate and the Democrat-led Assembly. A bill to make NYPIUA permanent recently passed the Assembly, but was unable to survive obstacles in the Senate. The Legislature concluded its session on June 23, with a one-year extension of NYPIUA.

“We are disappointed with a number of senators whose short-range views on this crisis will eventually hurt homeowners in the downstate region,” said Emek.

NYPIUA’s life was extended for one year, as were provisions that allow auto insurers to cancel or non-renew up to two percent of their business on an annual basis. This provision was scheduled to expire on June 30, 2006.

The New York State Association of Realtors joined agents in pushing for the permanent extension for the NYPIUA, however, Emek said insurance industry support could have been stronger. “We could have used more coordinated support from the insurance companies on this issue, especially since they have contributed to the homeowners market destabilization,” she maintained.

But insurers applauded the legislative action on the one-year extension. “The seamless extension of these provisions has proven to be critical to the stability of the various affected insurance markets and it is positive that these provisions were extended,” the Property Casualty Insurers Association of America said in a statement from Kristina Baldwin, regional manager and counsel.

Sources: IIABNY, PCI

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