Poll Reveals Coverage Crunch For N.Y. Coastal Counties

A trade group survey of independent insurance agents finds New York State's coastal homeowners are having difficulty finding coverage in the primary market and producers are seeking alternative sources for placement.

The Professional Insurance Agents of New York State Inc. conducted a poll of 90 PIANY members in the downstate area of New York City, Long Island and Westchester County. The June survey found agents saying many primary carriers continue to seek reduction in their coastal exposures.

"With fewer companies and more underwriting restrictions, agents are turning to alternative markets to write homes close to the water," said David Dickson, PIANY president.

He said "PIANY is proposing steps to improve the usefulness of each type of alternative market for its members and spread the word about flood insurance."

Agents' use of the state's official market of last resort, the New York Property Insurance Underwriting Association (NYPIUA), to insure coastal homes climbed to 51 percent compared with 47 percent last year and 41 percent in February 2006.

Use of the excess lines market grew to 76 percent of agents using it this year compared with 67 percent last year and 61 percent in February 2006.

Most agents say they aren't using the state's Coastal Market Assistance Program (CMAP). The program encourages regular homeowners companies to waive distance-to-shore restrictions and accept coastal homeowners they otherwise would not write while using NYPIUA to assume much of the property risk. Only 12 percent of agents said they used CMAP.

PIANY began its survey of downstate members in February 2006, a month after the Allstate Group stopped accepting new customers and ceased policy renewals.

In the survey, 57 percent of respondents said at least one of their companies increased its nonrenewals in the past year--more than double the 24 percent reported last year.

This year, 69 percent of agents surveyed said at least one of their companies stopped accepting any new homeowners business. In Suffolk County, the figure is 92 percent. Nine agencies--10 percent of respondents--now have no companies willing to write new homeowners policies. All but one is located in Suffolk County, Long Island.

The average number of companies that will write new business for the 2007 respondents is 3.2; last year, it was 3.8. The average Suffolk agency has only 2.5 homeowners companies, down from 3.5 last year. Nine out of ten Suffolk agencies--89 percent--have fewer homeowners markets this year.

Insurers continue adding other restrictions, as well. Agencies saying one or more companies have stricter guidelines on distance to water: 84 percent this year, 71 percent last year. More or larger windstorm deductibles: 59 percent this year, 43 percent last year.

PIANY said it advocates a number of steps to improve conditions for its downstate members. On the legislative front, PIANY wants to increase the New York State Insurance Department's review of companies' nonrenewal plans.

PIANY also supports an annual policyholder notice about flood insurance. Homeowners policies exclude coverage for storm surge and other types of flood conditions, but the federal government makes such coverage available through a special program.

PIANY also advocated permanent legal status for NYPIUA with property insurance limits up to $1 million and offering replacement cost coverage, which some mortgage lenders require. NYPIUA should have hurricane deductibles like those used by insurance companies.

The NYPIUA plan was renewed by the state legislature last month for another year. The program has been the subject of political wrangling in the past with both parties using it as political leverage in budget negotiations.