IIAANY Survey Shows Shrinking Commercial, Personal Capacity

December 9, 2002

Results of a recent survey conducted by the Independent Insurance Agent Association of New York Inc. (IIAANY) indicate a continuing decrease in availability of both personal and commercial insurance coverages in the state, prompting the association to urge the state legislature to address problems afflicting the auto and contractors’ markets.

The on-line survey by the Syracuse-based trade association, which polled its members Oct. 14-28, confirms a severe crisis in the liability insurance market serving New York’s building contractors. More than 90 percent of the respondents said at least one of the multiple companies they represent refuses to write new construction accounts. Eighty-six percent indicated at least one of their carriers refuses to renew existing policies. For those policies that are renewed, nearly half of the responding agents said that commercial general liability premiums increased 25 to 50 percent. Of particular concern are extra policy exclusions, say two-thirds of the respondents. These exclusions restrict coverage for additional insureds, subcontractors, work at heights, contractual liability, war, terrorism and mold, among others.

Besides coverage for construction and trucking risks, the survey respondents noted severe affordability and availability issues in New York’s personal automobile insurance market and workers’ compensation. Three-fourths of the respondents said the average premium for personal auto insurance has increased at a rate of between 11 percent and 25 percent. None of the agents reported a decrease.

The survey also showed that some coverages, such as personal automobile, commercial property, and commercial general liability have become significantly less available and more expensive. Others, such as homeowners’ insurance and directors and officers coverage, have gone up in price but not as dramatically as other coverages.

In addition, premium increases for most lines of coverage are increasing at a rate of between 11 percent and 25 percent.

Almost all agencies that participated in the survey have had a carrier stop writing one or more coverages in the last year. More than one-third have had three or four carriers stop writing a coverage. The coverages most often dropped are personal automobile, commercial general liability and workers’ compensation. Nearly half of the respondents said that at least one of their carriers had terminated their contracts in the last two years.

The respondents were almost unanimous in saying that insurance for construction risks has become much less available during the past two years. Nearly 60 percent of respondents said that all types of contractors are now having difficulty obtaining coverage.

An unscientific method was used to conduct IIAANY’s market availability survey, which was conducted on-line at IIAANY’s Web site. The association’s entire membership was invited via electronic mail and other communication vehicles to participate in the survey. While 182 agents responded, not all answered each of the 61 questions that addressed all lines of property-casualty insurance and several broad classes of business. Some of the respondents conduct little or no business in certain lines.

The full survey summary and complete report are available at IIAANY’s Web site, www.iiaany.org.

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