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

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 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, and D) looking into the estimated cost of obtaining comparable homeowners' insurance if their previous coverage has been cancelled.

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 decade, 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 marked may very well change 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.

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.

Fiscal implications

None.

Effective date

Immediate.