Since its founding in 1914, the New York State Insurance Fund (NYSIF) has been focused on providing a workers’ compensation market for small to medium sized accounts. NYSIF has not been involved with big corporate accounts very often because private market capacity has rarely been a problem for large accounts.
But, as Kenneth Ross, NYSIF chief operating officer and executive director, recalls, right after Sept. 11, 2001, his organization was hit with coverage requests on behalf of some of the state’s largest high-rise, high-profile risks.
“After 9/11 some of the biggest problems were with employers with high concentration of personnel in one location,” Ross notes, adding that this can be a big issue in New York City. “We had some large financial and media companies without a private market so they came to us for the first time. They were no longer desirable risks for the private market even though they were mostly office-type risks. But they had no place to go. We were confronted for the first time trying to provide an adequate quote for these risks.”
So NYSIF underwriters became immersed in New York City real estate, weighed the underwriting variables, and came up with quotes for these large employers in downtown locations.
After NYSIF established the price, private carriers swooped in at the eleventh hour to undercut NYSIF’s quote so they could grab the accounts and their brokers could get a commission, something NYSIF does not pay.
That was just fine with Ross, who is satisfied with the role NYSIF played in helping to stabilize the economy and avoid a major insurance market disruption. The high-rise employers were not the usual risk profile for NYSIF anyway.
“We set the bar where it should be. Private carriers came in and undercut us slightly. However, we were setting the tone,” he says.
This is an excerpt from a longer story that appears in the June 7 issue of Insurance Journal East.
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