Proposed New York Insurance Reforms a Florida-Proven Formula for Hurting Customers, PCI Explains
Jun 7, 2013
The following article was published in The Insurance Journal on June 6, 2013:
Groups Warn N.Y. Assembly’s Insurance Reform Bills Have Potential to Backfire
Industry groups are warning that the New York State Assembly’s recent approval of the post-Sandy insurance reform package has the potential to backfire and are urging the state Senate not to take up this legislation.
The reform package includes a wide range of measures including: establishing a “homeowner’s bill of rights”; creating standards for hurricane windstorm deductibles; restricting insurers’ use of anti-concurrent causation provisions; and establishing a private right of action for the insureds for unfair insurance settlement practices when the claim arises from a declared disaster or emergency.
The insurance reform bill package was approved by the state’s Assembly Tuesday and has been delivered to the state Senate for further consideration.
The American Insurance Association (AIA) described these reform measures as “misguided, if well-intentioned.”
“AIA is disappointed by the passage of these bills. This legislation could negatively impact availability and affordability of homeowners and commercial property insurance in New York State,” said Gary Henning, AIA’s Northeast region vice president.
He argued that while these bills are intended to serve policyholders, they would simply “open the floodgates for even greater litigation after a catastrophe” thereby increasing systemic costs without providing significant benefits to policyholders who already have substantial rights and protections under existing law.
“AIA urges the Senate not to take up this misguided, if well-intentioned legislation,” Henning said, adding that the package of bills the Assembly passed on Tuesday would do little to effectively educate and protect policyholders, while likely bringing about unintended consequences.
“Since Superstorm Sandy, insurers have now closed over 95 percent of all related claims and paid out more than $5 billion to New York customers with a one percent complaint rate,” he said.
Additionally, the Property Casualty Insurers Association of America (PCI) warned that the legislation adopted this week by the New York Assembly has the potential to backfire by limiting availability of insurance and driving up costs for consumers, particularly in areas of the state impacted by Sandy.
‘A Proven Formula for Hurting Consumers’
“This package of legislation may make for a nice press release for Assembly members, but in the end this could hurt the very people they are trying to protect,” said Kristina Baldwin, vice president for PCI. Baldwin said the Assembly’s approach follows “a proven formula for hurting consumers.”
Following Hurricane Andrew in Florida in 1992, there was a rush to pass new laws, she said.
“As a result, Florida’s insurance market now ranks 50th among states for homeowner and auto insurance, with 40 fewer companies offering homeowners insurance in Florida than before the legislation,” Baldwin said. “Now, the Assembly has potentially put New York on a path to the bottom.”
The New York Assembly’s bills create new requirements that could limit insurance options for consumers and increase litigation costs for insurers, all which may mean significant premium rate increases, she argued.
“In the aftermath of Superstorm Sandy, the overwhelming majority of consumer insurance problems reported were directly related to flood insurance which is administered by the federal government, not homeowner insurance,” said Baldwin. “The Assembly’s legislation in all likelihood, have a serious, long-term and negative impact on the affordability and availability of homeowners insurance, particularly in coastal and high risk areas,” she said.
View the original aricle here: http://www.insurancejournal.com/news/east/2013/06/06/294653.htm