N.Y. Fair Plan Reinstated For A Year
By Daniel Hays
NU Online News Service, June 23, 11:38 a.m. EDT?The New York legislature late Friday ended a lengthy political stalemate and approved a one-year renewal of the state's Fair Plan program, which acts as insurer of last resort for homeowners businesses.
Renewal of the Fair Plan, known as the New York Property Insurance Underwriting Association, was part of a combination measure that halted a feud over several insurance issues between the Republican controlled State Senate and the Democratic-led Assembly.
The standoff between the two sides commenced Aug. 2001, when laws related to auto insurance non-renewals, excess profits on auto insurance, homeowners file-and-use rating and auto flex rating expired and were not renewed.
On April 30, 2003, the Fair Plan expired.With the sunset of the Fair Plan, renewals and new policy applications were halted and thousands of the state's home and business owners were forced to scramble for insurance coverage.
The split between the two chambers had seen the Senate pushing insurance legislation that included provisions to reinstate auto insurance "flex rating." Flex rating permits rate changes, within certain parameters, without prior regulatory approval. Democrats balked at approving a renewal of flex rating.
The agreement worked out between Republican Gov. George Pataki, Senate Majority Leader Joseph Bruno and Assembly Speaker Sheldon Silver renewed the Fair Plan for one year, but did not renew flex rating for auto insurance.
Flex rating, for plus or minus rate changes up to 15 percent without prior approval, was approved for commercial liability insurance for a period of three years.
The negotiated measure, S. 5700, also included reinstatement of the state's 2 percent non-renewal law for three years. That regulation allows a carrier to non-renew up to two percent of their auto insurance book within a specified geographic territory.
Provisions governing homeowners insurance file-and-use and auto insurance excess profits were also approved and will remain in place for three years.
Michael Moran, American Insurance Association Northeast Region director of public affairs said his organization would continue to work for restoration of auto flex-rating and reform of the state's no-fault auto insurance system.
Mr. Moran said the Washington-based AIA had lobbied successfully against legislation in New York that would have banned credit-based insurance scoring.
The legislature's limited activity on insurance issues, before the two chambers went on summer recess was good news because "it was more than we expected," commented John Cucci the Alliance of American Insurers vice president and Northeast regional manger.
He said the Alliance was disappointed because the legislature failed to pass any part of a large package of auto insurance anti-fraud measures.
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