What's happening
This bill creates the New York Flood Insurance Association to provide flood insurance and, if necessary, homeowners insurance, with rules for administration, rates, participation, and oversight.
Why it matters
Addresses gaps in flood insurance availability by creating a backstop insurer. The bill establishes a state-run association to ensure New Yorkers can obtain flood insurance when private insurers are unwilling or unable to provide coverage, helping property owners in high-risk or underserved areas maintain financial protection and comply with mortgage requirements.
Could influence homeowner insurance markets during crises. If the Superintendent determines that homeowners insurance is not available in certain areas or circumstances, the association may also provide homeowners insurance, acting as a safety net for residents who might otherwise be left uninsured due to market withdrawals or restrictions.
Spreads risk and costs across all participating insurers. All insurers authorized to write flood or homeowners insurance in New York are required to be members, sharing in the association’s profits, losses, and operating expenses. This ensures the burden of insuring higher-risk properties does not fall on any one company or group of policyholders, but rather is distributed throughout the industry.
Built-in oversight, reporting, and consumer protections. The association is governed by a board with representatives from both insurers and the public, must submit regular reports to the Superintendent and legislature, and allows for consumer appeals. Rate increases and deficits are capped and subject to oversight, and there are mechanisms for transparency and accountability, aiming to balance affordability, solvency, and fairness.
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Who cares
Property owners unable to obtain flood insurance
The bill would let them apply for association coverage after a diligent search in the normal insurance market, subject to property eligibility and premium requirements.
Insurers writing flood coverage in New York
The bill would require them to join the association and share its writings, expenses, profits and losses based on their net direct premiums.
Insurance agents and brokers
They could submit applications for clients, and three licensed agents or brokers would serve on the association’s board as appointees of the superintendent.
Department of Financial Services
The superintendent would approve the association’s operating plan, oversee rates, hear eligible appeals and determine when unavailable coverage warrants activating additional insurance markets.
Headline styles
Create State Flood Insurance
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to insurance
- Referred to insurance
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Create State Flood Insurance
In Assembly Committee · Insurance · Sponsor Stacey Pheffer Amato
Full text
10 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
4852
2017-2018 Regular Sessions
IN SENATE
March 3, 2017
Introduced by Sen. SEWARD -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance
AN ACT to amend the insurance law, in relation to creating the state flood insurance association
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The insurance law is amended by adding a new article 54-A to read as follows:
ARTICLE 54-A
NEW YORK FLOOD INSURANCE ASSOCIATION Section 5450. Definitions.
5451. Association.
5452. Procedures.
5453. Rates, rating plans, rules and statistics.
5454. Participation.
5455. Appeals.
5456. Availability of reports; immunity.
5457. Annual statement.
5458. Examinations.
5459. Reimbursement fund.
5460. Additional powers of the association.
§ 5450. Definitions. In this article:
(a) "Flood insurance" means coverage against loss of or damage to any property resulting from flood, as defined in paragraphs five and six of subsection (a) of section one thousand one hundred thirteen of this chapter and implemented by section three thousand four hundred fortyfour of this chapter.
(b) "Association" means the New York flood insurance association established by this article.
(c) "Plan of operation" or "plan" means the plan of operation complying with section five thousand four hundred fifty-one of this article.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD04832-01-7
S. 4852 2
(d) "Insurable property" means real property at fixed locations anywhere in this state, or the tangible personal property located thereon, which is determined by the association, after inspection and pursuant to criteria specified in the plan, to be insurable. Neighborhood or area location shall not be considered in determining insurable condition. Property is not insurable if it has characteristics of ownership, condition, occupancy or maintenance which violate public policy.
(e) "Net direct premiums" means gross direct premiums written on property in this state for flood insurance less return premiums or the unused or unabsorbed portions of premium deposits.
(f) "Homeowners insurance" means such homeowners insurance policies defined in subsection (a) of section two thousand three hundred fiftyone of this chapter, as are determined by the superintendent to be equivalent to any homeowners policies developed by a nationally recognized principal rate service organization, except that where the market value of the insured property is less than its replacement cost, then the coverage shall be provided in policies determined by the superintendent to be equivalent to that contained in market value (HO-8) policies.
§ 5451. Association. (a) The association known as the New York flood insurance association is established, consisting of all insurers authorized to write and engaged in writing within this state, on a direct basis, flood coverage insurance. Every such insurer shall be and remain a member of the association as a condition of its authority to continue to transact flood and homeowners insurance in this state.
(b) The association shall be governed by a board of thirteen directors, ten of whom shall be elected annually by cumulative voting by the members of the association, whose votes in such election shall be weighted in accordance with each member's net direct premiums written during the preceding calendar year. The remaining three directors shall be appointed annually by the superintendent and be duly licensed insurance agents or brokers representative of broad segments of the public obtaining insurance through the association.
(c) The association shall, pursuant to the provisions of this article and the plan of operation and with respect to flood coverage issued pursuant to subsection (g) of this section and homeowners insurance should the same be made available through the association in accordance with a determination of necessity made by the superintendent pursuant to section five thousand four hundred sixty of this article on insurable property, have the power on behalf of its members:
(i) to cause policies of insurance to be issued to applicants;
(ii) to assume reinsurance from its members; and
(iii) to cede reinsurance.
(d) The association shall adhere to a plan of operation, consistent with the provisions of this article, approved by the superintendent after consultation with affected individuals and organizations. The plan shall provide for economical, fair and non-discriminatory administration and prompt and efficient provision of flood coverage pursuant to subsection (g) of this section and homeowners insurance, when a determination of necessity is made by the superintendent pursuant to section five thousand four hundred sixty of this article to promote orderly community development. It shall contain other matters including, but not limited to, provision for necessary facilities; management of the association; assessment of members to defray losses and expenses; commission arrangements; reasonable and objective underwriting standards; acceptance and cession of reinsurance and procedures for determining amounts of insurance to be provided by the association. The amounts shall not be
S. 4852 3
in excess of one million five hundred thousand dollars for the insurable real property or the tangible personal property thereon.
(e) The directors of the association may, on their own initiative or at the request of the superintendent, amend the plan subject to approval by the superintendent.
(f) The association shall offer homeowners insurance, as defined in subsection (f) of section five thousand four hundred fifty of this article upon a determination of necessity having been made by the superintendent pursuant to section five thousand four hundred sixty of this article.
(g) In addition to flood insurance, homeowners insurance should the same be made available through the association in accordance with a determination of necessity pursuant to section five thousand four hundred sixty of this article. On or before October first, two thousand twenty, the superintendent shall require the association to report to him or her as to the number of policies written pursuant to this subsection and paragraph three of subsection (f) of section five thousand four hundred fifty-four of this article, and any other information the superintendent may require. On or before January first, two thousand twenty-one, the superintendent shall report to the governor and the legislature regarding the number of policies issued pursuant to this section and such paragraph and shall include recommendations as to the continuation of such insurance offerings.
(h) The association shall adhere to a plan of operation, consistent with the provisions of this article, approved by the superintendent after consultation with affected individuals and organizations. The plan shall provide for economical, fair and non-discriminatory administration and prompt and efficient provision of flood coverage pursuant to subsection (g) of this section and homeowners insurance, when a determination of necessity is made by the superintendent pursuant to section five thousand four hundred sixty of this article to promote orderly community development. It shall contain other matters, including, but not limited to, provision for necessary facilities; management of the association; assessment of members to defray losses and expenses; commission arrangements; reasonable and objective standards; acceptance and cession of reinsurance and procedures for determining amounts of insurance to be provided by the association. The amounts shall not be in excess of one million five hundred thousand dollars for the insurable real property or the tangible personal property thereon.
(i) The directors of the association may, on their own initiative or at the request of the superintendent, amend the plan subject to approval by the superintendent.
(j) Not less than once every thirty days, the association shall report to the superintendent, the speaker of the assembly, and the temporary president of the senate on the number, location and type of policies written through a coastal market assistance program pursuant to section five thousand four hundred fourteen of this chapter.
§ 5452. Procedures. (a) Any person having an insurable interest in insurable property, who has made a diligent effort in the normal insurance market to procure flood insurance, pursuant to subsection (g) of section five thousand four hundred fifty-one of this article and homeowners insurance upon a determination of necessity having been made by the superintendent pursuant to section five thousand four hundred sixty of this article from an authorized insurer, is entitled to apply to the association for such coverage. Such application may be made on behalf of an applicant by a broker or agent authorized by him or her.
S. 4852 4
(b) If the association determines that (i) the property is insurable in accordance with the plan and (ii) there is no unpaid, uncontested premium due from the applicant for prior insurance on the property (as shown by the insured having failed to make written objection to charges within thirty days after billing), the association, upon receipt of the premium or portion prescribed in the plan, shall cause a policy of flood insurance or homeowners insurance upon a determination of necessity having been made by the superintendent pursuant to section five thousand four hundred sixty of this article to be issued for a term of one year.
(c) Any member may cede flood insurance pursuant to subsection (g) of section five thousand four hundred fifty-one of this article and coverage for and homeowners insurance upon a determination of necessity having been made by the superintendent pursuant to section five thousand four hundred sixty of this article written on insurable property to the association as provided in the plan.
(d) The association shall notify those policyholders whose insured properties are located in areas served by a market assistance program established by the superintendent for the purpose of facilitating placement of homeowners' insurance of the possibility of eligibility for coverage through such program. Such notification shall include information on how to apply and such other information as required by the superintendent.
§ 5453. Rates, rating plans, rules and statistics. (a) The rates, rating plans, rating rules and statistics applicable to the insurance written by the association shall be subject to the relevant provisions of article twenty-three of this chapter except as otherwise provided in this section.
(b) Rates, rating plans and rating rules applicable to flood insurance, pursuant to subsection (g) of section five thousand four hundred fifty-one of this article and homeowners insurance upon a determination of necessity having been made by the superintendent pursuant to section five thousand four hundred sixty of this article written by the association shall be no greater than the following percentages of those recommended for the voluntary market by the principal rate service organization in this state:
(1) one hundred twenty percent with respect to:
(A) owner-occupied residential dwellings consisting of not more than four dwelling units;
(B) household furnishings and personal property contained in any household unit;
(C) contents of any retail-type business located in store-type premises and operating in a single location, provided such business is owned by its operators, who are all related by blood or affinity;
(D) real property of eleemosynary institutions used exclusively for such eleemosynary purposes including furnishings and personal property contained therein;
(2) one hundred thirty percent with respect to:
(A) non-owner occupied residential dwellings consisting of not more than four dwelling units;
(B) residential structures consisting of more than four but not exceeding eight units with or without business occupancies;
(C) homeowners insurance upon a determination of necessity having been made by the superintendent pursuant to section five thousand four hundred twelve of this chapter;
S. 4852 5
(3) one hundred forty percent with respect to residential dwellings consisting of more than eight dwelling units, with or without business occupancies;
(4) one hundred thirty percent with respect to any risks not otherwise provided for in paragraphs one, two and three of this subsection.
(c) The rates, rating plans and rating rules recommended by the principal rate service organization, together with such other information the superintendent may require, shall be submitted by the association at least sixty days prior to the date on which they are to become effective for risks written by it.
(d) Filed rating rules or plans may provide standards for the application of surcharges for risks containing unsafe or hazardous conditions, and shall provide for prompt removal of the surcharges upon the elimination of those conditions.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the insurance law, in relation to creating the state flood insurance association
Purpose
To create the state flood insurance association, which will extend flood insurance to all New York State citizens.
Summary of provisions
Add new article 54-A to the insurance law.
Justification
Following Hurricane Sandy, a large portion of the State of New York was devastated due to the effects of the storm. The majority of these damages were a result of the immense amount of flooding that occurred throughout the state. As of now the FEMA NFIP is the only flood insurance option offered to New York citizens. Sadly, many New Yorkers will soon have to face skyrocketing insurance rates, leaving many homeowners without flood insurance or unable to afford their own home. This bill, like the bill that established the New York Property's Insurance Underwriter's Association in the 1960's would address the problem by creating a state flood insurance association. Thus the bill will extend a flood insurance option to offer affordable and manageable coverage to all New York citizens.
Legislative history
S.4222 of 2015-16.
Fiscal implications
To be determined.
Effective date
Immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.