New York lawmakers are moving on legislation to bring flex rating for auto insurance back to the state and to make permanent the state's market of last resort for homeowners insurance.
Michael Barrett, legislative representative for the Independent Insurance Agents and Brokers of New York (IIABNY), said that an agreement between both houses has been reached on the bill, but it still has to go through the voting process.
Introduced in both houses of the New York Legislature, the bill–A.11693/S.8624–is sponsored by Senate Insurance Committee Chairman James Seward, R/I/C-Oneonta, and Assembly Insurance Committee Chairman Joe Morelle, D-Irondequoit.
The bill would allow carriers to adjust auto insurance rates within a 5 percent flex band without approval from the state's superintendent of insurance.
Matthew F. Guilbault, government affairs counsel for the Professional Insurance Agents of New York (PIANY), noted that there are also certain consumer protections built into the bill.
He said insurers would only be allowed to increase rates twice in a year, and increases could only occur at the end of a policy period.
Mr. Barrett said the Legislature added some additional language reinforcing the notion that the Insurance Department reserves the right to oversee how flex rates are being used by insurers. A statement by the Property Casualty Insurers Association of America (PCI) noted that the superintendent can still reject insurers' rates if he finds they are not justified.
Mr. Guilbault said PIANY is comfortable with the consumer protections because while it is important for companies to be able to lower rates when the market allows, the controls in the bill prevent a "runaway market" where rates are uncontrollably raised.
Paul Tetrault, northeast state affairs manager for the National Association of Mutual Insurance Companies (NAMIC), said he would like to have seen a larger band as opposed to the 5 percent band that the Legislature is considering, but he said the bill represented progress in the state. "Flex rating has been a top priority for the industry for a number of years," Mr. Tetrault said.
Paul Magaril, regional manager and counsel for PCI, noted that states with less strict regulatory environments for rate approvals enjoy greater competition and more price stabilization.
The bill would also make permanent the New York Property Insurance Underwriting Association (NYPIUA), the state's insurer of last resort for homeowners' risks. Currently, NYPIUA is reauthorized periodically by the Legislature, and coverage has lapsed in the past when legislators have failed to renew the program before its expiration date.
Many bills designed to make the program permanent have failed to pass through the Legislature over the years.
Mr. Barrett credited Sen. Seward and Assemblyman Morelle with working toward an agreement to break the legislative gridlock both on NYPIUA and on flex rating.
In addition to granting NYPIUA permanent status, the bill would also authorize the program to write broader coverage, and it calls for NYPIUA to establish incentives to encourage insurers to write wraparound policies.
Mr. Guilbault said agents have traditionally had problems securing adequate coverage through NYPIUA because the policy itself offers inadequate coverage, and also because carriers have been reluctant to write policies that would wrap around the NYPIUA coverage and fill in the gaps.
He added that the bill does not necessarily spell out what the new incentives will be for carriers to entice them to write wraparound coverage, and he noted that more details will likely emerge if and when this provision is implemented.
Mr. Tetrault said it is hard to say whether companies will be more willing to write the wraparound if the bill passes, and that it will be a company-by-company decision.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.