Stop Discriminatory Insurance Practices

Section 1. Short title. This act shall be known and may be cited as the "insure our communities act".

§ 2. Legislative findings and intent. The legislature hereby finds and declares the following:

1. The Department of Financial Services has identified that New York state is "in the midst of an affordable housing crisis driven by numerous factors, including the availability of affordable insurance";

2. The Office of Budget Policy and Analysis has identified that "rates of rental cost burden have increased across all income groups since 2012" and "significant racial disparities exist among households suffering from housing insecurity. In New York, 55 percent of households headed by a Hispanic person (any race), 50 percent of households headed by a Black or African American person and 48 percent of households headed by an Asian person had at least one housing insecurity problem, compared with 31 percent of households headed by a white person. People experiencing homelessness were also disproportionately Black and Hispanic or Latino";

3. A 2022 study conducted by the Department of Financial Services and New York State Homes and Community Renewal found that affordable housing developers "had seen premiums rise, even in instances where there had been no previous claims made, to levels that they deemed prohibitively expensive";

4. The availability of fair and affordable insurance has a significant impact on community credit needs as homeowners and business owners need insurance coverage in order to secure residential or commercial loans, as well as to protect their homes and businesses when damages occur, and

EXPLANATION--Matter in italics (underscored) is new; matter in brackets

[ ] is old law to be omitted.

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housing developers need access to fair and affordable insurance coverage to secure financing for the development of affordable rental housing;

5. A lack of fair and affordable insurance coverage can limit access to homeownership and business development, reduce the development of affordable rental housing, and can also limit lending and community development financing opportunities of institutions covered by New York's Community Reinvestment Act that evaluates banking institutions on their ability to meet credit needs of the entire community;

6. Climate change, resulting primarily from the combustion of fossil fuels, is an immediate, grave threat to the state's communities, environment, and economy. New York has experienced an increasing number of extreme and unusual weather events, including Hurricanes Irene and Lee and the unprecedented Superstorm Sandy in 2012, which caused at least 48 deaths and $41.9 billion in damage in New York state;

7. Preexisting social and economic challenges combined with the uneven distribution of climate change impacts makes certain communities more vulnerable to climate change impacts than others, such as low- and moderate-income communities and communities of color;

8. Homeowners, businesses, and affordable multifamily developers are increasingly facing obstacles in securing fair and affordable insurance coverage in light of climate change and its economic impacts, and the New York State Climate Impacts Assessment has identified that "many regions are already experiencing an increase in policy premiums derived from past extreme climate events";

9. Scientific evidence shows that climate change impacts will become more severe over time with the continuing rise of global warming from greenhouse gas emissions;

10. The state of New York must raise additional resources in order to mitigate the effects of climate change, as evident by a report commissioned by New York State Energy Research and Development Authority's (NYSERDA) estimating that climate change costs in New York "could approach $10 billion annually by midcentury"; and

11. Comprehensive data collection on insurance industry practices in New York state in the form of a statewide database is necessary in order to facilitate enforcement of the law and to determine if additional steps need to be taken to increase the availability of affordable insurance in areas underserved by insurance companies. Such data includes but is not limited to:

a. The availability and affordability of insurance coverage and the quality or type of insurance coverage, by the race, ethnicity, gender and income of the policyholder, as well as race, ethnicity, and income of the census tract the insured risk is located in;

b. The location of the principal place of business of insurance agents, by census tract, including in low- and moderate-income census tracts and census tracts in disadvantaged communities;

c. The extent to which insurance companies are significant financiers of the fossil fuel industry and new fossil fuel projects; and

d. Whether the extent and characteristics of insurance availability, affordability, and coverage require public officials to take any actions to remedy redlining or other illegally or unfairly discriminatory insurance practices; or to promote insurance availability and affordability in areas underserved by insurers.

§ 3. The insurance law is amended by adding a new article 92 to read as follows:

ARTICLE 92

INSURE OUR COMMUNITIES ACT Section 9201. Definitions.

9202. Implementing climate leadership and community protection

act targets for insurers.

9203. Reporting.

§ 9201. Definitions. In this article, unless the context or subject matter otherwise requires:

(a) "New fossil fuel project" means a project designed to facilitate the production of fossil fuels in excess of what is in development as of the effective date of this article, including production of new coal infrastructure, power plants, or mines. "New fossil fuel project" also includes projects that would support exploring new oil and gas fields or otherwise expanding oil and gas reserves. Examples of such projects include, but are not limited to, new wells, pipelines, terminals or gas power plants.

(b) "Department" means the department of financial services.

(c) "Superintendent" means the superintendent of the department of financial services.

(d) "Precautionary principle" means an approach taken to regulation which mandates that when activities under consideration may lead to unacceptably serious or irreversible harm that is scientifically plausible but uncertain, actions shall be taken to avoid or diminish that harm.

(e) "Guidance" means the department guidance for New York domestic insurers on managing the financial risks from climate change issued by the department of financial services.

(f) "Disadvantaged communities" means communities identified as disadvantaged communities pursuant to the criteria set forth in paragraph c of subdivision one of section 75-0111 of the environmental conservation law.

§ 9202. Implementing climate leadership and community protection act targets for insurers. (a) The department shall:

(1) Integrate the precautionary principle into its regulation and supervision of insurers by:

(A) incorporating measures to anticipate, prevent, or minimize the effects of climate risk and its adverse effects; and

(B) implementing cost-effective measures to address the climate risk exposure of insurers, even in the absence of full economic or scientific certainty;

(2) Require insurers to annually file and report progress on plans to align their investment and underwriting activities with science-based climate mitigation targets consistent with the emissions limits set in section 75-0107 of the environmental conservation law and to certify that they do not invest or underwrite new fossil fuel projects;

(3) Align insurer investment and underwriting activities with science-based climate mitigation targets consistent with the emissions limits set in section 75-0107 of the environmental conservation law by prohibiting underwriting for any new fossil fuel project and directing insurers to phase out existing underwriting for exploration, extraction, processing, exporting, transporting, and any other significant action with respect to oil, natural gas, coal, or any byproduct thereof; and

(4) Develop a process for insurance companies to certify as a condition of licensure that they file and report progress on plans to align their investment and underwriting activities with science-based climate mitigation targets consistent with the emissions limits set in section 75-0107 of the environmental conservation law and to certify that they do not invest or underwrite new fossil fuel projects. The department shall review each insurance company's certification to ensure that they file and report on such plans.

(b) Within twelve months of the effective date of this article, the superintendent shall develop and implement criteria for certain insurers doing business in this state, as determined by the superintendent pursuant to subsection (f) of this section, to submit annually to the superintendent a report disclosing:

(1) Such insurer's investments in:

(A) any company that derives ten percent or more of revenue from exploration, extraction, processing, exporting, transporting, and any other significant action with respect to oil, natural gas, coal, or any byproduct thereof;

(B) any project intended to facilitate or expand exploration, extraction, processing, exporting, transporting, and any other significant action with respect to oil, natural gas, coal, or any byproduct thereof; and

(C) any project intended to construct any infrastructure related to projects under subparagraph (B) of this paragraph, such as wells, pipelines, terminals or refineries;

(2) The financed emissions from all of the insurer's investments in the previous reporting year;

(3) Information concerning such insurer's gross premium underwriting for:

(A) any company that derives ten percent or more of revenue from exploration, extraction, processing, exporting, transporting, and any other significant action with respect to oil, natural gas, coal, or any byproduct thereof;

(B) any project intended to facilitate or expand exploration, extraction, processing, exporting, transporting, and any other significant action with respect to oil, natural gas, coal, or any byproduct thereof; and

(C) any project intended to construct any infrastructure related projects under subparagraph (B) of this paragraph, such as wells, pipelines, terminals or refineries;

(4) The insured emissions from all of the insurer's underwriting in the previous reporting year;

(5) Any other information the department deems necessary to effectively implement and enforce any rule or regulation promulgated pursuant to this article.

(c) The criteria developed by the superintendent pursuant to subsection (b) of this section shall enable the superintendent to post the information reported to the superintendent pursuant to subsection (d) of this section on the department's website.

(d) Within twelve months of the effective date of this article, and annually thereafter, such insurers doing business in this state, as determined by the superintendent subject to subsection (f) of this section, shall submit a report to the superintendent disclosing the information set forth in subsection (b) of this section for the preceding calendar year.

(e) Within three months of receiving the report required pursuant to subsection (b) of this section, and annually thereafter, the superintendent shall compile and post the information in such report on the department's website.

(f) The superintendent may engage the services of attorneys, actuaries, accountants and other experts not otherwise a part of the superintendent's staff, at the reporting insurer's expense, as shall be reasonably necessary to assist in the review of such insurer's filing under subsection (c) of this section. All persons so engaged shall be under the direction and control of the superintendent and shall act in a purely advisory capacity.

(g) The superintendent shall subject an insurer to the requirements of this section if:

(1) The insurer reports over one hundred million dollars on its annual schedule T filing with the National Association of Insurance Superintendents; or

(2) The insurer's activities or investments may expose such insurer to a heightened level of risk from the physical or transition effects of climate change; or

(3) The superintendent otherwise determines that disclosure would be in the public interest.

(h) The superintendent shall review and update the guidance at least once every two years and shall update the guidance to reflect developments elsewhere in the world, with the intent of incorporating emerging best practices and ensuring the smooth functioning of New York insurance markets.

(i) The superintendent may adopt such regulations as the superintendent deems necessary to carry out the purposes of this article.

(j) Within five years of the effective date of this article, the superintendent shall require any insurer doing business in the state to certify that they have divested from:

(1) any company that derives ten percent or more of revenue from exploration, extraction, processing, exporting, transporting, and any other significant action with respect to oil, natural gas, coal, or any byproduct thereof;