Time is quickly running out for the New York State Legislature to reportedly avert a disruption in the state’s property insurance market.
At the same time, according to the Independent Insurance Agents Association of New York Inc., lawmakers could also greatly benefit overburdened motorists by reinstating two provisions in the state’s Insurance Law that have worked well in the past.
The New York Property Insurance Underwriting Association, which provides coverage to those who cannot obtain it in the voluntary market, is due to expire April 30. State Sen. James Seward (R-Oneonta), chairman of the Senate Insurance Committee, has introduced a bill (S.3467) that would extend NYPIUA until June 30, 2006. The joint underwriting association, created in 1968 by the State of New York, offers fire, vandalism and malicious mischief, sprinkler leakage and time element protection, as well as extended coverage. It also administers New York’s Coastal Market Assistance Program, a network of participating insurance carriers that assists coastal homeowners purchase insurance.
Each month, NYPIUA writes about 1,500 new policies. Eighty-five percent are for dwellings; the remaining 15 percent cover commercial properties. NYPIUA renews several thousand more policies on a monthly basis, mostly in coastal areas of Long Island and urban centers around the state. If NYPIUA’s authorization lapses, the program will reportedly be forced to stop accepting new applications for coverage from home and business owners and nonrenew current polices.
“Banks and other lenders won’t issue mortgages without proof of insurance,” John Costello, IIAANY Chair of the Board, commented. “So, if you are closing on a home or attempting to sell a property, especially in a coastal area, you might have to put off all your plans until the program is reauthorized. And, a delay could prove costly.”
Seward’s bill would also reinstate provisions in the Insurance Law that had been in effect for many years and gave insurers some needed flexibility in setting personal auto insurance rates and canceling and nonrenewing policies. One provision, the so-called “2 Percent Rule,” requires insurers to renew 98 percent of their in-force auto policies. IIAANY has been a strong advocate for extending the “2 Percent Rule” and flex-rating law, which allows insurance companies to increase or decrease rates by up to 7 percent without the prior approval, but with the oversight, of the state Insurance Department. Both provisions expired in August 2001.
“The Senator’s legislation is right for consumers as it helps property owners and motorists,” said Costello, who is also a principal owner in the Rochester-based agency Costello, Dreher, Kaiser & Associates. “Each house of the Legislature has dealt with these issues in incremental ways, but now that they’re linked together, the Senate and Assembly should not delay in passing S.3467.
“This is a unique opportunity for our Senators and Members of the Assembly to step forward and continue to protect property owners at the same time they are helping stabilize the state’s auto insurance market. But they must act by April 30.”
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