Insurers are blasting a proposal by New York regulators to reform the state’s coastal homeowners insurance market, a plan one exec called “a solution in search of a problem.”
“The insurance industry is scratching it head,” said Ellen Melchionni, president of the New York Insurance Association. “Why the superintendent is taking drastic measures when there is no problem with availability of insurance in Long island is rather curious.”
Her comments come in response to a plan issued late last week by the New York Insurance Department, that calls for a slew of new measures – including steeper limits on non-renewals, narrower exclusions for wind deductibles and the creation of a special fund to offset premium increases for coastal homeowners. A special panel — headed by Superintendent James Wrynn — is scheduled to begin hearings on the proposals later this month.
The Property Casualty Insurers Association of America (PCI) said it had “strong concerns” over the proposal, which it said could create instability in what they call a healthy market in the coastal New York.
“Trying to fix a problem which doesn’t exist may create unintended problems and lead to market instability,” said Kristina Baldwin, PCI assistant vice president for government affairs. “These proposals could create marketplace conditions that negatively affect both the availability and affordability of coastal homeowners insurance for consumers.”
Melchionni said, contrary to regulators’ beliefs, admitted market insurers are vigorously seeking new business along the state’s high-risk coastlines — specifically Nassau and Suffolk counties. She said that the New York Property Insurance Underwriting Association (NYPIUA) — the market of last resort for for homeowners in the state – writes only 1 percent of the market in Nassau and 2 percent in Suffolk, an indication of the relatively high availability of insurance in those areas.
One of the proposals would cut in half the percentage of policies an insurer can non-renew in a given year. Currently, a company can non-renew up to 4 percent of its policies in force. The department is considering dropping that to 2 percent – a move that insurers don’t want to see.
“It’s a solution in search of a problem” Melchionni said. “It’s a pretty healthy marketplace and these changes might disrupt that and cause insurers to reconsider how much business they want to keep in New York.”
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