A Plan for New York to Prepare for Catastrophes

New York State’s NYS 2100 Commission, created in the wake of Sandy to offer recommendations on ways to better prepare for natural disasters, is out with its initial report, including a section on potential changes to the insurance environment.

Perhaps most notable is the recommendation that the report does NOT contain: any sort of expansion of the state’s residual market environment, such as a catastrophe fund. Some of the most important include:

• A consumer education and disclosure initiative to publicize the existence of wind damage and hurricane deductibles; any capped reimbursements in a policy; when coverage for mold exists and when it doesn’t; and the flood insurance availability.
• A study of why more consumers in floodplains don’t purchase flood insurance. And a study of anticoncurrent causation clauses.
• Studies on existing building stock and what kinds of risk reduction are possible.
• An examination of whether the state should establish a revolving fund to provide incentives or loans for mitigation.
• Allowing on-bill recovery of mitigation loans through insurance premiums.
• Authorizing insurers to provide “civil authority” business interruption as a separate line of business, which would provide BI coverage in cases where the government has ordered evacuations or shut down roads. This might be expanded to indemnify even in cases where the underlying peril (like flood) would not ordinarily be covered.
• An examination of whether to issue moratoriums on cancellations/non-renewals in the aftermath of a major catastrophe.
• Providing expedited procedures to issue adjuster licenses after a catastrophe.