Directs superintendent of insurance to amend rules and regulations with respect to homeowners' policies

Summary of specific provisions

Section 1: Amends Insurance Law section 3425(o)(2)to reduce the percent- age or net number of non-renewed homeowners' policies that insurers terminate in coastal areas that triggers the mandate that such insurer must file a withdrawal plan to minimize market disruption. Under current law, if an insurer plans to "materially reduce its volume of policies" by cancelling or non-renewing 20% or more of its homeowners' policies or the net number of policies by at least 500 on a state-wide basis during the next five years period or the same ratio of cancellations during the course of a single year, then such insurer must file a withdrawal plan that demonstrates how the homeowners' insurance market will not be disrupted.

This bill adds a supplemental definition for the term "materially reduce its volume of policies" that adds a lower threshold for those insurers that are non-renewing policies in the State's coastal areas. Under this definition, if a carrier plans to reduce its number of policies by 15% over 5 years or the net number of policies by 200 over a five year peri- od of time, or similar percentage of polices over a one year period of time in coastal areas, then the carrier must file a withdrawal plan that is specific to the coastal homeowners' insurance market. Coastal areas is defined as within one mile of the salt water line of New York's shoreline.

Section 2: Amends Chapter 136 of the Laws of 2008 to expand the charge of the Temporary Panel on Homeowners' Insurance Coverage to include evaluating the profitability of insurers that write homeowners' insur-

ance in this state and the profits or losses such insurers sustain by writing coverages along this State's coast line. Further, such Task Force shall look into the estimated cost of obtaining comparable home- owners' insurance if their previous coverage has been cancelled.

Section 3: Amends section 23 of Chapter 136 of the Laws of 2008 to encourage the Superintendent of Insurance to seek to new ways to identi- fy 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

One of New York's largest insurers, recently announced plans to cancel or "non-renew" more than 26,000 homeowner's insurance policies in the coastal portions of New York City, Westchester County and Long Island. However, because this number represents less than 4% of their total number of policies written in New York State, such insurer is not required by law to notify the State Insurance Department of their plans, file a withdrawal plan, or take any steps to ensure that their departure from this segment of the market is conducted in an orderly manner to minimize the disruption that is sure to be caused by so many homeowners scrambling for replacement coverage.

This bill adds a new alternative definition for "materially reduce its volume of policies" so that if an insurer inordinately begins to with- draw from the coastal homeowners' market, that such an insurer must also file a withdrawal plan. In this withdrawal plan filed with the Insurance Department, the insurer must set for the reasons for such withdrawal, describe the measures to be taken by the insurer to minimize market disruption, and provide other information that the Superintendent may require. The filing of this plan not only forces the withdrawing insurer to justify its actions to the Department, but gives notice to the Department so that they can use the regulatory tools at its disposal to encourage other insurers to increase the number of homeowners' writings in coastal areas.

Prior legislative history

2006 - S.7609 - Referred to Insurance 2008 - S.2269-A - Referred to Insurance

Fiscal implication

None.

Effective date

Immediate.