Department Introduces Draft Reg on Coastal Deductibles
(Sept. 23, 2010) — An issue that has been a top priority for IIABNY may finally be coming to a conclusion that will benefit both consumers and the industry. IIABNY has been actively engaged with the Insurance Department and the Legislature on the topic of wind and hurricane deductibles and other issues related to the coastal property market in the downstate area. The New York State Insurance Department (NYSID) announced today that it is close to issuing an amendment to Regulation 159 that would mandate an important distinction between “windstorm” deductibles and “hurricane” deductibles. A priority for IIABNY has been the application of triggers for deductibles. In a press release today NYSID released a draft of the amendment that calls for windstorm (non-hurricane) deductibles to apply only to traditional policy perils such as wind, tornado, cyclone or high winds. The windstorm deductible will apply in the same manner as it applies to all other perils insured under the policy, such as fire and vandalism. In contrast, under the amended regulation insurers may apply a hurricane deductible if they can show there is sufficient exposure to a hurricane risk to warrant the application of a hurricane deductible. This will be accomplished through an insurer’s normal rate filing process.
In addition to distinguishing between the two types of deductibles, minimum standards have been set for hurricane deductibles, incorporating several key points from IIABNY’s agenda. The trigger for the deductible will be standardized to apply only when the National Weather Service determines that the hurricane was a Category 1 or greater hurricane and it makes landfall in New York State. Insurers will still have the option to trigger a hurricane deductible at the Category 2 level, as many of them do today. Furthermore, the hurricane deductible only applies to losses resulting from direct damage caused by winds within the period beginning 12 hours before landfall and ending 12 hours after the National Weather Service cancels the last hurricane watch or warning.
The Amendment to Regulation 159 also prohibits the use of hurricane deductibles for loss of use coverage (additional living expense) or loss of rental income. Hurricane deductibles may not exceed 5% of the insured amount for the dwelling.
In addition to the changes in deductibles, the Insurance Department is also proposing an amendment to Regulation 154 that adds a 2% per county limit (or 50 policies, whichever is greater) for reduction in policies written before it becomes a “material reduction of volume of policies”, causing additional reporting requirements by insurers to the Superintendent.
IIABNY feels that the proposal is an important first step toward addressing the hurricane deductible issue but that more can be done. We will continue to work with the Insurance Department and the industry as the regulation is finalized to address content and implementation issues.
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Encompass Responds to IIABNY Concerns Over Client Contact
(Jan. 29, 2008) — IIABNY commends Encompass for its timely response to the association’s concerns over an earlier company statement that sought to limit contact between the insurer’s independent agents and their clients, who are parties to an agreement resolving complaints against the company. Encompass Field Product Manager Douglas Moyer Jr. “clarified” the company’s position in a recently released letter prepared for the carrier’s New York agencies. IIABNY had told company officials it was troubled by communications from the company that directed its agents to refrain from contacting clients until they accepted an offer to settle litigation filed against the company.
“It was not our intent to limit those practices, but simply encourage you to allow the Notice of Class Action and Proposed Settlement to reach the customer prior to contacting,” Moyer wrote. “We apologize for any confusion in this matter.”
In December, Encompass and corporate parent Allstate agreed to send notices to thousands of New York homeowners whose policies were non-renewed in 2007, offering them the right to an immediate quote and policy renewal of at least three years. The announcement came after the state Insurance Department learned the carrier non-renewed the homeowners partly because they did not have other policies with Allstate and Encompass, such as life or automobile coverage.
Encompass also held multiple conference calls last week with its downstate agents before issuing the clarification and apology.
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Coastal Market, Late Notice Fixes Top '08 Legislative Positions
(Dec. 4, 2007) — Requiring so-called "wrap" insurance policies that feature an additional layer of coverage for homowners insured through New York's Coastal Market Assistance Program is among the major initiatives IIABNY will pursue during the 2008 legislative session. The association included the proposal in its annual Legislative Position Paper released earlier this week. Beginning in January, IIABNY will also seek the adoption of an arbitration process to expedite claims and resolve disputes related to damages caused by a catastrophic storm. Additionally, the association will continue to advance legislation that would grant permanent statutory status to the New York Property Insurance Underwriting Association, which administers C-MAP.
Another top priority in 2008 is enactment of a law allowing an insurer to reject a claim for late notice only if the carrier can show its rights to effectively investigate, negotiate a settlement or defend a claim are prejudiced by the late notice. In September, the association mailed a letter to the top executives of some property and casualty carriers in New York asking them to "not invoke late notice unless there is material prejudice." IIABNY is continuing to work with the state Insurance Department to draft legislation that would implement changes to late notice procedures.
IIABNY also supports a series of changes to facilitate the ease of conducting business in the excess and surplus lines market, replacement of "agents" and "brokers" licenses with a single "producers" license and legislation allowing agents to recoup policy-related fees from policyholders. For more, see the complete Legislative Position Paper posted on IIABNY's Web site.
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New C-MAP Online Application Posted on NYPIUA Site
(Oct. 24, 2007) — New York Property Insurance Underwriting Association, administrator for the state Insurance Department-initiated Coastal Market Assistance Program, has announced that a new C-MAP application is now available on the NYPIUA Web site. The application is to be used in the C-MAP rotation process by producers unable to bind a “wrap-around” policy with their own companies. Producers can complete and electronically submit applications by accessing and clicking the “Coastal Market Assistance Program” icon. NYPIUA’s system automatically images the application and makes it available for immediate transfer to participating companies for review. The new system allows NYPIUA to provide producers with company dispositions and instructions for binding coverage within five business days of the application’s submission.
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Senators Receive Homeowners Prescription from IIABNY
(Oct. 9, 2007) — IIABNY Chair of the Board Stephen R. Zogby expressed IIABNY’s support for several legislative and regulatory remedies before the Senate Insurance Committee today at a public hearing to address the deteriorating homeowners insurance market in New York’s coastal areas. Zogby stressed the need to act during the next legislative session for permanent statutory status for the New York Property Insurance Underwriting Authority. He also urged: recognition of catastrophe models in rate development; creation of a national catastrophe fund, if actuarially sound; standardizing windstorm deductible triggers; and a method allowing favorable state and federal tax treatment of catastrophe reserves set aside by insurers. A greater flexibility in the degree and timing of rate changes is also needed.
“It is commonly held that the homeowners’ product has been under priced since its inception,” Zogby explained. “Rate suppression has affected the level of profitability for this line of insurance. The market itself will adjust to the correct pricing given the opportunity.”
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| ||IIABNY member agent Jeffrey Rehm raises his hand|
to address the Senate Insurance Committee. Testify-
with Rehm are IIAB of Suffolk County Pres. Michael
Romeo, left, and IIABNY Board Chair Stephen Zogby.
Zogby, who is also executive vice president of Scalzo, Zogby & Wittig in New Hartford, headed a delegation of IIABNY member agents testifying before the Insurance Committee. Despite assertions to the contrary, the IIABNY representatives raised the prospect of a looming crisis in the homeowners market serving New York’s coastal areas. Former IIABNY Regional Director George Yates recommended an expansion of the eligibility criteria for NYPIUA's Coastal Market Assistance Program or C-MAP and use of a standard HO-3 “wrap policy" as a safety net for consumers. Yates is a member of the C-MAP Steering Committee.
“In order to provide the best possible coverage, a standard HO-3 wrap policy should be written in conjunction with a NYPIUA property policy on the building,” added Yates, who is also president of Dayton, Ritz & Osborne in Easthampton. Following his testimony, Thomas Crowley, CPCU, CIC, vice president of Maran Corporate Risk Associates in Southampton, and IIAB of Suffolk County President Michael Romeo, and R. Jeffrey Rehm, director of East End Insurance Service in Southold, recounted their personal experiences as agents.
The Insurance Committee, led by state Sen. James Seward (R-Oneonta), hosted the public hearing today at Suffolk County Community College in Brentwood and heard from a range of industry trade groups invited to testify. IIABNY will continue to work with the state Insurance Department for regulatory change and insurance companies to build capacity in the market. Go online for a copy of Zogby and Yates’ prepared remarks as well as the latest results of IIABNY member surveys on homeowners issues in metropolitan New York City and the use of wrap-around policies.
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NYSID Orders Insurers to Stop Tying
Homeowners Non-Renewals to Auto, Life
(Aug. 28, 2007) — Insurers were told today by the New York State Insurance Department that they could not refuse to renew homeowners policies simply because the policyholder had no other business with the company. Carriers, according to a NYSID circular letter , were instructed to rescind any non-renewal notices issued on that basis if they had not yet taken effect.
The department announced the order after homeowners in the state’s coastal areas complained insurers were non-renewing their policies if they did not have auto or life insurance coverage with the same companies. A day earlier, Newsday reported Superintendent of Insurance Eric R. Dinallo was reviewing Allstate and Liberty Mutual practices of considering a policyholder’s choice of auto insurance when deciding to renew a homeowner’s policy.
In a news release issued today, Dinallo acknowledged that the Insurance department had ordered two companies, which he did not name, to stop such practices. He said the department had moved to immediately stop the “impermissible tying of renewals of coastal homeowners insurance policies to whether the homeowner has auto or other policies with the same company.” Insurance law, he explained, prohibits tying to safeguard consumer choice.
The department is asking consumers receiving non-renewal notices on the basis that they did not have other insurance with the same company should immediately contact their agent or company. Consumers can also call the Insurance Department’s Consumer Services hotline at (800) 342-2726 during business hours. IIABNY supports its member agencies and brokerages in encouraging their clients to contact the Insurance Department if they feel they have been adversely affected by a company’s actions.
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New Encompass Regional Chief Calls on IIABNY, Discusses Coastal Markets
(June 28, 2007) — Encompass Insurance’s new regional sales director visited IIABNY’s Dewitt office June 27 for an introductory meeting. Steve Taylor, CPCU, CLU, ChFC, succeeded Mark McDonnell, who recently assumed a position with another carrier. IIABNY President and CEO Dick Poppa, Senior Vice-President Kathy Weinheimer and Director of Research & External Communications Tim Dodge met with Taylor and IIABNY member agent Rob Parsons of Parsons & Associates in Syracuse. Parsons is also chairman of Encompass' national producer council.
The discussions focused on the property insurance market in the New York metropolitan area; insurance regulatory reform and related subjects were also discussed. While Taylor did not indicate any forthcoming changes in Encompass’s underwriting appetite, the participants agreed to keep in close contact in the future.
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Utica National Adopts Limitations on New Downstate Business
(October 18, 2006) — Utica National Insurance Group, citing increased hurricane activity over the past two years, forecasts for worsening conditions and a shrinking reinsurance market, is restraining growth in homeowners insurance policies in metropolitan New York City and Nassau and Suffolk counties. In a fax dated Oct. 9, Utica National provided a brief summary of it revised “new business guidelines” for New York.
Among the underwriting guidelines addressed in the fax are restrictions covering distance from the coast, pricing and locations on the east end of Long Island. The fax also refers agents to the construction guidelines in Utica National’s Underwriting Guidelines if a home does not meet the minimum distance from the coast requirements described in the fax.
Utica National joins Main Street America and its subsidiary National Grange Mutual Insurance Group, as well as Allstate, MetLife, Travelers, Merchants and other carriers, in limiting their downstate property business.
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MSA Limits Property Business on Long Island
(September 22, 2006) — The Main Street America Group says it is no longer writing new homeowners policies in Nassau and Suffolk counties. MSA announced the action, which took effect immediately, in a recent letter to the insurer’s customers in New York and Pennsylvania. The restriction also applies to the company’s dwelling fire landlord protective policies, BOPs, monoline fire and buildings on multi peril policies. MSA will also begin non-renewing those policies in Nassau and Suffolk counties, beginning Jan. 1, 2007. MSA will issue multi peril conditional renewal notices with no building coverage and no more than $1,000 on business personal property. Business personal property coverage will also be limited to no more than $1,000.
“In evaluating our risk and exposure in the event of a catastrophic storm, we rely to a large extent on storm models that use data generated by past storms, as well as exposure data specific to The Main Street America Group,” the MSA letter stated. “The most recent storm models indicate that a hurricane in the Long Island area could cause much greater loss than previously estimated.”
A MSA fact sheet also outlined other changes in the affected areas the insurer has targeted.
Personal umbrella policies written in conjunction with homeowners policies will be non-renewed.
Commercial umbrella policies written in conjunction with BOP, multi-peril and fire policies will be non-renewed.
Conditional renewal notices will be issued on any current contractor policies to eliminate building coverage and limit business personal property to $1,000. The company’s Contractor Plus business property requirement has also been revised to $1,000 from $10,000.
MSA, which operates in New York state through National Grange Mutual Insurance Co., joins Allstate, MetLife, Travelers, Merchants and other carriers in limiting their property business on Long Island and other downstate areas.
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Downstate Responses Sought for Homeowners Survey
(August 25, 2006) — IIABNY is strongly encouraging its downstate members to take a few minutes to answer the questions in the association's latest market conditions survey. Answers to the 20 survey questions will go a long way toward helping IIABNY convince carriers and the state Insurance Department that the downstate homeowners market is in trouble.
Respondents need only answer the questions online and click the "Submit Your Responses" button. Responses will be accepted until the close of business on Aug. 25. Please have the person in your office most knowledgeable about the market answer the questions by clicking the link above. In order to keep a close eye on market conditions in the near future, IIABNY plans to conduct the survey every three months.
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IIABNY Calls for C-MAP Revival
(August 11, 2006) — IIABNY has called on the New York State Insurance Department to jump-start insurance company involvement in the Coastal Markets Assistance Program. Kathy Weinheimer, the association's senior vice president for industry relations and education, asked the department in a letter dated July 27 to Superintendent of Insurance Howard Mills to use its authority to obtain full participation in C-MAP from insurers.
Weinheimer pointed to the growing number of insurers applying new underwriting restrictions in the downstate region. “It is critical,” she wrote, “that C-MAP be fully functional for those agents who are forced to place business that has been declined or non-renewed by those insurers who are taking restrictive underwriting actions.” She also recalled prior discussions with Insurance Department staff about meeting with insurers about the C-MAP rotational process and the availability of wrap-around products (policies written by voluntary insurers that provide coverages not provided by the basic C-MAP policy). “Very few insurers were offering a wrap product at that time,” she wrote, “discouraging agents and brokers from using C-MAP.”
IIABNY continues to monitor the homeowners insurance market in downstate New York and to work for measures to improve it.
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Members' Help Is Needed Now in Final Legislative Push(June 21, 2006) — IIABNY is calling on its members statewide to immediately call on state lawmakers as New York's current legislative session enters a final countdown. The association is seeking passage of legislative (S.8359) that would finally grant the New York Property Insurance Underwriting Association permanent statutory authority and enact badly needed anti-fraud reforms for the state's no-fault auto insurance system. To help contact legislators, IIABNY is asking members to first go to the association's online Grassroots Action Center.
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IIABNY Issues NYPIUA Action Alert to Members
(June 16, 2006) — Legislation introduced recently in the New York State Senate that would reauthorize the New York Property Insurance Underwriting Association for only one year has prompted IIABNY to urge its members to call on their senators as soon as possible to reject the proposal in favor of a permanent extension of the program. To expedite the call, the association's members can use IIABNY's Grassroots Action Center. Reminder, the legislative session is scheduled to end June 22.
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Recent Meetings Mark Efforts to Resolve
Homeowners Availability Issues
(May 24, 2006) — IIABNY has worked aggressively over the past several months toward reaching solutions to homeowners market availability problems in the New York City metropolitan area and, more specifically, Long Island. During that time, you have hopefully been kept aware of developments through the association’s various e-mail messages to members and articles in the IIABNY Insider.
Earlier this week, Sharon Emek, CIC, Ph.D., IIABNY’s newly elected chair of the board, and Michael Barrett, the association’s legislative representative, met with Assembly Speaker Sheldon Silver (D-Manhattan) to discuss downstate homeowners availability. Earlier that day in a similar meeting, IIABNY representatives reviewed the issue with James Seward (R-Oneonta), chairman of the Senate Insurance Committee, and representatives of the New York State Association of Realtors.
IIABNY has also spearheaded a grassroots campaign involving member contacts and discussions with key Senate and Assembly representatives on Long Island. And, prior to the close of the legislative session in late June, every IIABNY member in the metro New York area may be asked to write area legislators and request their help.
The association believes the availability problem is destined to widen dramatically in the months to come. With that prospect looming, the New York Property Insurance Underwriting Association should be granted permanent statutory authority, offering, at minimum, a long-term market solution. IIABNY will continue to press the issue with legislators, insurance carriers and the state Insurance Department while reporting on the issue and our progress through various media in the metropolitan New York area.
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