New York Gov. David Paterson has signed into law a comprehensive bill (A.11693/S.8624) designed to address the state's coastal homeowners’ insurance market and reinstate flex rating for private passenger automobile insurance throughout the state. The bill, which was passed by both houses of the New York State Legislature last week, was supported by the American Insurance Association (AIA).
“AIA commends Senator Jim Seward and Assemblyman Joe Morelle for introducing, and Governor Paterson for signing, this important piece of legislation,” said Gary Henning, AIA Northeast Region assistant vice president. “Increasing the availability of homeowners’ insurance along the coast and encouraging greater competition in the private passenger auto insurance market will ultimately provide better products and more choices for New York State consumers.”
Under the bill, the New York Property Insurance Underwriting Association (NYPIUA) will be made permanent, a move designed to provide greater stability in the residual market, according to Henning. In addition, NYPIUA will be allowed to offer a more expansive type of coverage to homeowners throughout the state.
A special advisory panel on homeowners' insurance and catastrophe coverage will also be reinstated, having originally been convened in 1996. The advisory panel is required to report back to the legislature by Nov. 30, 2009, and annually thereafter, on ways to improve the homeowners' insurance marketplace for both insurers and consumers. The second part of the bill reinstates flex rating for automobile insurance, which had previously been in effect in New York from 1995 to 2001. Under the bill, carriers will be allowed unlimited flexes downward and two flexes upward annually, within a 5% rating band.
“Reinstatement of flex rating for private passenger automobile insurance has been one of the insurance industry’s priorities in New York over the last seven years,” said Henning. “Flex rating will allow carriers to react more quickly to market conditions. The residual market should decrease. New products will be developed. All of this will ultimately benefit New York State drivers.”
The flex provisions take effect on Jan. 1, 2009; the rest of the bill takes effect immediately.
“AIA believes this bill represents another positive step towards modernizing the New York State insurance market,” concluded Henning.