N.Y. Contractors Market Still Tight

Mr. Bingeman referred to sections 240 and 241, which he called "scaffolding-type legislation." In his analysis, it makes the property owner "absolutely liable if somebody falls from a height," affecting both contractors and subcontractors.

The law is a "strict liability standard, so if someone falls from a scaffold or a ladder or any height, which can be liberally interpreted, the insurer doesn't have the usual defenses with respect to contributory negligence on the part of the employee or of another contractor," he explained.

"It really just becomes a matter of negotiating how much is to be paid, and that has really made it difficult for both admitted and non-admitted markets to write business successfully," Mr. Bingeman said.

Though various agent, producer and insurer associations have been actively lobbying to improve the law, he said their efforts are being fought by unions and trial lawyers "who perceive it as taking away a right."

He said that a number of proposals have been put forth to revise the law, but whether it can be changed "depends on whether the insurance industry can clearly communicate the problems and have the trial bar and the unions understand and come to some sort of a compromise."

Len Lo Vullo, president and chief executive officer of LoVullo Associates Inc. in Buffalo, N.Y., emphasized that "the situation with the hard market is because rates have been so inadequate for the last 15 years." Labor issues aside, he said, "The fact that rates have been dropping consistently for the past 10 years," while costs of construction has gone up, "it's just natural that the market had to turn."

In addition, he noted, "There are more multimillion-dollar settlements now than ever," which companies have not prepared for "on the rate side. The soft market and the legal situation has been a double-whammy on the contractors."

Steven LoVullo, senior commercial underwriter with LoVullo Associates Inc., said the combination of the labor law situation in New York and the tight market has caused some carriers to either pull back on their coverage or on the form that they're offering.

"There are only a couple of carriers offering the same terms and conditions they were offering a year or 18 months ago," he said. "Everybody else has tightened their form and everybody, including the companies that are still offering the same form, has increased rates as much as 100 percent."

He said the residential market "has gotten a lot tougher than the commercial side." Even though contractors are paying a lot more money for coverage, however, "I don't see them going out of business, but I'm sure they are passing a lot of this on to the consumer."

Steven LoVullo concluded that even if building associations succeed in pulling together "some kind of reciprocal or purchasing group?and there are a lot of rumors to that effect?how are they going to survive?"

The problem, he said, is that "They're still going to be sued. If they are going to provide the same coverages the companies over the past five years have been providing, they're going to get killed."