Debate Heats Up Over Coastal Homeowners

Although hurricane seasons ends in November, the storm over coastal homeowners insurance New York appears to be just getting started.

In mid-October, Insurance Superintendent James Wrynn plans to convene a meeting of the state’s Temporary Panel on Homeowners Insurance Coverage, a group charged with evaluating what is, and is not working when it comes to the insurance market in coastal New York.

In calling the meeting, Wrynn plans to look at three new reforms that he said will improve affordability and availability of coverage in those regions – particularly Nassau and Suffolk counties on Long Island.

Those proposals include limiting the number of policies an insurer can non-renew, reining in and standardizing wind deductibles and creating a catastrophe pool to offset premium increases.

“Let’s fix the roof before it starts raining,” Wrynn said, announcing the plan. “Coastal New York has been lucky for a while to escape a direct hit from a hurricane, but luck is no substitute for planning. Homeowners have already been pummeled by rising rates, non-renewal and threats of nonrenewal of their homeowners insurance policies. Homeowners shouldn’t have to worry about whether they will be able to get coverage when their policies expire. This uncertainty must be addressed. We have extensively reviewed our rules and regulations and we are planning for the storm we know is coming.” The state will also be taking a tougher look at building codes, insurer preparedness for recovery and rebuilding after a catastrophe and public education about storm risks and mitigation.

But insurers insist the move is “a solution in search of a problem,” said Ellen Melchionni, president of the New York Insurance Association. “The insurance industry is scratching it head. Why the superintendent is taking drastic measures when there is no problem with availability of insurance in Long island is rather curious.”

In contrast to the portrait described by Wrynn, Melchionni said standard market insurers are vigorously seeking new business along the state’s high-risk coastlines while the New York Property Insurance Underwriting Association (NYPIUA) – the market of last resort 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.

The Property Casualty Insurers Association of America (PCI) echoed those comments, saying the insurers’ group has “strong concerns” over the proposal, which it said could create instability in what they call a healthy market in 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.”

Will this battle simply blow over? We’ll see this month when insurers as regulators begin to air their grievances.