N.Y. homeowners market analysts disagree; how broken is it?

Assessing the condition of New York’s homeowners insurance market is easier said than done. It’s either strong, stable or fragile depending upon whether the analyst is an agent or an insurer.

Also, Allstate Insurance Co.’s decision to limit its business in eight counties in the state is either a “draconian” step or a measured response to hurricanes and financial reality.

While insurance companies told state officials at a Manhattan public hearing that the market is healthy despite planned cutbacks by the largest writer, some agents maintain that the market is “fragile” and have called for regulatory action to maintain access to markets.

Allstate, which writes about 25 percent of the market, maintained it had no choice but to curtail writings in light of hurricane forecasts, the density of certain downstate communities and its own concentration of business. “We are, and we will take steps to remain, a financially strong insurer. We also intend to remain one of the top insurers serving the New York marketplace,” said Brian Pozzi, Allstate’s regional counsel.

Allstate told Superintendent of Insurance Howard Mills that its reduction in policies would be less than four percent a year. The company also said that it would give insureds 75 days notice, more than the required 45 days.

But Mills, who called the hearing following the giant insurer’s early February announcement, wondered aloud if the insurer’s pullback was an overreaction.

“It seems to us and many of your customers that after a five year period of rapidly increasing your market share, built upon your long history of being very aggressive in this market, that this is a very draconian and sudden action,” Mills commented.

If Mills is worried about consumers, he need not be, according to one insurer group, the American Insurance Association. The AIA told Mills that the state’s homeowners insurance market is strong.

“The homeowners market is competitive throughout the state,” said Gary Henning, AIA assistant vice president, Northeast region. “Additional capacity has been created in the marketplace since the end of the most recent hurricane season. New Yorkers should continue to have relatively easy access to the homeowners insurance market, despite the concerns.”

More guarded optimism
Another insurer group was a bit more guarded in its optimism. Kristina Baldwin, regional manager for the Property Casualty Insurers of America, told regulators that there are still enough insurers in the state to avert a market crisis.

“All indications are that, despite the tumultuous 2005 hurricane season, insurance is available in New York’s coastal areas,” she said. “Still, some insurers are concerned about their ability to charge premiums to adequately cover their exposure and consumers may have fewer choices in some areas.”

While insurers painted a positive picture, the Independent Insurance Agents & Brokers of New York, estimated 50,000 Long Island homeowners will have to find other coverage due to Allstate’s cutbacks. These agents questioned whether remaining carriers would be able to absorb this business and said they are “deeply concerned about the health” of the Long Island and New York City market.

The Professional Insurance Agents of New York State said a survey of its members found that while there is no immediate crisis in availability in the area, Allstate’s recent moves could potentially undermine the situation. “Our information suggests that, at this point in time the homeowners market in the downstate area remains adequate to handle the current level of new business,” said N. Stephen Ruchman, immediate past president of PIANY, stressing that conditions may change.