A senior New York lawmaker is proposing to expand the state’s residual market to cover more coastal risks with the goal of enticing the private market and mimic catastrophe funds in Florida and California.
State Senator Jeff Klein (D-Bronx/Westchester) introduced legislation last week that proposes that an advisory panel review “homeowners’ insurance/catastrophe coverage to study certain facets of profitability of insurance in coastal areas.”
The bill proposed that the state’s Homeowners Insurance Task Force explore several issues in regards to catastrophe coverage in 2015, including:
- The evaluation reinsurance and “other risk sharing mechanisms” in regarding the the coastal homeowners market.
- The feasibility of the New York property insurance underwriting association “issuing bonds or establishing other financial mechanisms for catastrophe insurance coverage”, which also include an evaluation of the feasibility of establishing a state-wide catastrophe insurance fund.
- A review of other states catastrophe programs, “Including but not limited to an evaluation of the experience under the California Earthquake Authority and the Florida Commission on Hurricane Loss Projection Methodology.”
“This legislation will ensure that the homeowners insurance market along the coast remains stable and secure now, and particularly in the event of another catastrophic hurricane,” Kein said in an emailed statement regarding the legislation. “Given the already difficult task in obtaining homeowners insurance, especially for those in hurricane-prone coastal regions, this bill will direct the already existing Homeowners Insurance Task Force to further ascertain how the insurance market reacts to insurers that drop coverage to homeowners.”
The Empire State’s existing FAIR Plan — the New York Property Insurance Underwriting Association — offers essential homeowners coverage but does not off the coverage seen in coastal “Beach Plans” offered in states such as Texas and Florida.
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