New York retail and wholesale agents fired a barrage ofarguments Friday at regulators who are considering their requestfor a change in the rule governing their placement of certainhard-to-place excess lines business.

In testimony at a New York Insurance Department hearing inManhattan they urged expansion of the state's excess and surpluslines export list, to eliminate what they said are the unnecessaryregulatory burdens inherent in the current system.

Regulators responded that the department will consider theagents' arguments, but will also examine possible negativeconsequences of allowing agents to place business with carriers notlicensed in the state (non-admitted insurers) without firstreceiving declinations from admitted carriers.

In the course of questioning witnesses, department officialssuggested the request might be pared down to limit its geographicscope and voiced concern about testimony that was only anecdotal innature.

A few months ago, the Excess Lines Association of New York(ELANY) made the proposal to the department that it add severallines of coverage to the export list.

The change would allow excess lines brokers to place those riskswith unauthorized insurers without first obtaining threedeclinations from authorized insurers.

Retail and wholesale agents argued at the session Friday thatoffering carriers risks in lines that the carriers have no interestin writing just to obtain the appropriate declinations creates anunnecessary, time-consuming burden for agents.

The agents spoke at length about the difficulties in securinggeneral liability coverage for contractors and homeowners coveragefor residents of Long Island coastal counties of Nassau andSuffolk--two coverages that would be added to the export list underELANY's proposal.

While the department panel expressed concern that moving linesof coverage onto the export list would encourage agents to shiftmore risks to the excess and surplus lines without first checkingavailability in the standard market, the agents said that marketforces would prevent them from doing that.

Gary A. Hollederer, immediate past president of the ProfessionalInsurance Wholesalers Association of New York (PIWA), said thatstandard carriers pressure agents for growth, and threaten toterminate relationships with agents who cannot meet growth targets.This, he said, is another reason why agents would not place risksin the non-admitted market unless they were sure that theirstandard lines carriers would not write the risks.

Dan Corbin, director of research for the Professional InsuranceAgents of New York (PIANY), also emphasized that the department canalways take certain lines back off of the export list if it is notpleased with the results.

Asked by panelist Larry Levine, chief examiner, property bureauat the department, whether it is too much trouble for an agent tocall an underwriter just to confirm that the company is still notwriting a given risk, multiple agents questioned whether that wouldeven comply with the department's intent.

The agents pointed out that the declinations are supposed tocome from carriers that agents "have reason to believe" would beinterested in the risk. But the agents said that carriers makeclear that they will not write risks such as small to mid-sizecontractors and homeowners insurance along the coast of LongIsland.

Sharon Emek, managing director of CBS Coverage Group inManhattan, noted that carriers provide lists of the types ofcoverages they want to write, and she said that when the listschange, the carriers let agents know. She added that carriers alsotell agents not to submit the lines that they do not want to write,and indicated that underwriters get annoyed when the risks are sentto them for declinations.

Daniel Maher, executive director of ELANY also pointed out thatgetting a declination is not as simple as just placing a phone callto an underwriter. He said that the process is more complicated andinvolves filling out many forms.

For contractors, the agents said that there is coverageavailable in the standard market only for large contractors. Formid-size and small contractors, they said that if there is anycoverage available at all it is limited in scope and does notadequately protect their clients.

With respect to homeowners insurance on Long Island, panelistMichael Moriarty, deputy superintendent of property-casualtymarkets bureaus, said that the department recognizes that there isrole for excess and surplus lines carriers.

But he said that department information indicates that there issome appetite in the standard market for these risks, and he addedthat including all of Nassau and Suffolk counties on the exportlist "appears a little broad."

The department panel repeatedly questioned whether the agentswould accept adding only homes along the south shore of Long Islandto the export list.

For their part, the agents generally responded that they wouldaccept that proposal over nothing, but would favor including all ofNassau and Suffolk counties.

Mr. Moriarty called the day's testimony "helpful," but he saidthat a lot of the comments were anecdotal and difficult o verify.He said that there was value in the testimony about why agentswould rather write through standard carriers than throughwholesalers. "We'll look at both sides of this," Mr. Moriartyconcluded.

Mr. Levine said that, going forward, he would like to see thedepartment hold more hearings regarding the lines of coverages onthe export list, and he added that, in principle, the list shouldbe flexible and dynamic.