New York Eases Rules for Placing Difficult Risks in Excess Market

In a move widely supported by industry advocates, the New York State Insurance Department has approved new rules that would make it quicker and easier for to write some categories of higher-risk insurance that are typically placed in the excess market.

The department, after more than a year of floating the idea, has added nine new insurance categories to the so-called export list, meaning that brokers need not obtain three declinations from the standard market to place a particular risk in the excess market. The move, which was initiated by the Excess Line Association of New York, reflects an industry consensus about risks that typically unavailable in the standard market.

Those categories are vacant commercial property, multi-peril risks for contractors, special events, prize indemnification, some general liability coverage, employed lawyers liability, contract frustration, and commercial property and commercial umbrella excess liability coverage with high limits.

In addition, the department has added a host of risks to the export list which require only two standard market declination before being place in the excess market. Those are coverage for alcohol or drug rehabilitation centers and programs, residential facilities, day care centers, group homes, halfway houses, hospices care service providers, social services agencies, foster care service providers and home health care providers.

When the plan was announced last year, many agents in the Empire State applauded the moves, saying the three-declinations rule was a time-consuming, bureaucratic process that ignored agents’ and brokers’ common knowledge of the risk appetites of standard market.

The new rules went into effect immediately upon the decisions publication yesterday.