N.Y. Agents Vote Thumbs Down On Residual Expansion
A proposal to open up contractors liability insurance to New Yorks residual market is getting a cool reception from the states insurance community.
New York State Insurance Department Superintendent Gregory V. Serio is holding public hearings to determine if he will require the New York Property Insurance Underwriting Association, its residual market, to open its doors to commercial liability insurance coverage.
The association currently acts as the states FAIR plan (Fair Access to Insurance Requirements), providing a residual market for fire, windstorm and extended property coverage.
In a statement, Mr. Serio said the department is holding the hearings to address concerns voiced by businesses and other organizations that say they cannot secure the appropriate insurance coverage for commercial liability.
"We dont think it is a good idea," said Thomas J. Derella, president of The Kingstar Company Inc., an agency in Kingston, N.Y. "We applaud the superintendents efforts to find market relief, but the real answer is to fix the labor law."
The law, set forth in Sections 240 and 241 of the New York State labor law, commonly referred to as the scaffolding act, holds property owners strictly liable for any injuries resulting in or around a scaffolding site. The injuries are not covered under workers compensation provisions and are costing insurers substantial amounts in unrestricted claims, industry representatives said.
Mr. Derella, who is also the president of the Professional Insurance Agents of New York, also said NYPIUA lacks the underwriting experience to price risks adequately. He believes that , over the long term, opening the risk to the residual market would create more capacity problems because existing carriers would not want to compete with NYPIUA.
John Buckley, executive vice president of NIF Services of New York, a managing general agency based in New York City, noted that without the labor reforms the residual market would face the same difficulties and expensive claims history that traditional carriers are facing today.
"It is a short-term setup for disaster," he said.
"We are concerned that this is a Band-Aid approach," said Kathleen Weinheimer, vice president of industrial relations for the Independent Insurance Agents & Brokers of New York.
Ms. Weinheimer said the association fears such an approach could drive carriers in that market out of the state due to the residual market assessments.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, November 21, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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