Operations of the New York Property Insurance Underwriting Association, or FAIR Plan, have once again been suspended due to the failure of lawmakers to pass legislation renewing the program.
More than 50,000 businesses and homes are currently insured through the plan that was barred from writing new policies as after April 30 as a result of the legislature’s inaction.
The situation is not new. This is the fifth time since 1995 that lawmakers have deadlocked over the bill to continue the plan. Democrats and Republicans have squabbled for years over whether to make the program permanent or have it sunset and renew periodically.
Assembly Democrats complain that Senate Republicans use the opportunity to renew it to attach unrelated bills. Democrats are opposing a two-month extension proposed by the Senate.
“I don’t want to give them that opportunity again,” said Assemblyman Pete Grannis (D-Manhattan), citing last year when the Assembly adopted changes to auto insurance that it previously had opposed.
NYPIUA President Joseph Calvo advised agents and insureds of the suspension in a memo. The plan will not write any new policies after April 30 and it will not issue any renewal policies with effective dates on or after June 29 based on the practice of issuing renewals within at least 45 days, but not more than 60 days in advance.
The suspension of operations also stalls further writing under the voluntary Coastal Market Assistance Program.
All policies issued prior to April 30 will continue to be serviced.
The Professional Insurance Agents of New York State Inc. has criticized lawmakers in Albany for failing to reauthorize the plan.
“NYPIUA’s recurrent sunsets are the result of the legislators’ inability to agree and are symptomatic of a dysfunctional process. Lawmakers need to come together and pass meaningful legislation that will allow New York property owners access to this ‘market of last resort’ when insureds cannot find insurance coverage anywhere else,” said PIANY President T.J. Derella, CPIA. “When NYPIUA is allowed to ‘sunset,’ property owners are left in the lurch; closings cannot go forward; and some properties may lack insurance for a loss.”
PIANY supports making NYPIUA a permanent legal entity, which would end the frequent cliffhangers affecting NYPIUA policyholders and agents. Plus, legal stability would allow NYPIUA to take on additional insurance-related roles, as authorized by statute, if needed.
“Short-term extenders are not the way to go,” said Derella. “It is time to free NYPIUA from its periodic burden of providing leverage in the legislative gridlock that afflicts Albany, and to find more constructive ways of reaching agreement on insurance issues that affect our businesses and our clients.”
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