New York retail and wholesale agents fired a barrage of arguments at regulators who are considering their request for a change in the rule governing their placement of certain hard-to-place excess lines business.

In testimony at a New York Insurance Department hearing in Manhattan two weeks ago, they urged expansion of the state's excess and surplus lines export list, to eliminate what they said are the unnecessary regulatory burdens inherent in the current system.

Regulators responded that the department will consider the agents' arguments, but will also examine possible negative consequences of allowing agents to place business with carriers not licensed in the state (nonadmitted insurers) without first receiving declinations from admitted carriers.

In the course of questioning witnesses, department officials suggested the request might be pared down to limit its geographic scope and voiced concern about testimony that was only anecdotal in nature.

A few months ago, the Excess Lines Association of New York (ELANY) made the proposal to the department that it add several lines of coverage to the export list.

The change would allow excess lines brokers to place those risks with unauthorized insurers without first obtaining three declinations from authorized insurers.

Retail and wholesale agents argued at the session Friday that offering carriers risks in lines that the carriers have no interest in writing just to obtain the appropriate declinations creates an unnecessary, time-consuming burden for agents.

The agents spoke at length about the difficulties in securing general liability coverage for contractors and homeowners coverage for residents of Long Island coastal counties of Nassau and Suffolk–two coverages that would be added to the export list under ELANY's proposal.

While the department panel expressed concern that moving lines of coverage onto the export list would encourage agents to shift more risks to the excess and surplus lines without first checking availability in the standard market, the agents said that market forces would prevent them from doing that.

Gary A. Hollederer, immediate past president of the Professional Insurance Wholesalers Association of New York (PIWA), said that standard carriers pressure agents for growth, and threaten to terminate relationships with agents who cannot meet growth targets. This, he said, is another reason why agents would not place risks in the nonadmitted market unless they were sure that their standard lines carriers would not write the risks.

Dan Corbin, director of research for the Professional Insurance Agents of New York (PIANY), also emphasized that the department can always take certain lines back off of the export list if it is not pleased with the results.

Asked by panelist Larry Levine, chief examiner, property bureau at the department, whether it is too much trouble for an agent to call an underwriter just to confirm that the company is still not writing a given risk, multiple agents questioned whether that would even comply with the department's intent.

The agents pointed out that the declinations are supposed to come from carriers that agents “have reason to believe” would be interested in the risk. But the agents said that carriers make clear that they will not write risks such as small to mid-size contractors and homeowners insurance along the coast of Long Island.

Sharon Emek, managing director of CBS Coverage Group in Manhattan, noted that carriers provide lists of the types of coverages they want to write, and she said that when the lists change, the carriers let agents know. She added that carriers also tell agents not to submit the lines that they do not want to write, and indicated that underwriters get annoyed when the risks are sent to them for declinations.

Daniel Maher, executive director of ELANY also pointed out that getting a declination is not as simple as just placing a phone call to an underwriter. He said that the process is more complicated and involves filling out many forms.

For contractors, the agents said that there is coverage available in the standard market only for large contractors. For mid-size and small contractors, they said that if there is any coverage available at all it is limited in scope and does not adequately protect their clients.

With respect to homeowners insurance on Long Island, panelist Michael Moriarty, deputy superintendent of property-casualty markets bureaus, said that the department recognizes that there is role for excess and surplus lines carriers.

But he said that department information indicates that there is some appetite in the standard market for these risks, and he added that including all of Nassau and Suffolk counties on the export list “appears a little broad.”

The department panel repeatedly questioned whether the agents would accept adding only homes along the south shore of Long Island to the export list.

For their part, the agents generally responded that they would accept that proposal over nothing, but would favor including all of Nassau and Suffolk counties.

Mr. Moriarty called the day's testimony “helpful,” but he said that a lot of the comments were anecdotal and difficult o verify. He said that there was value in the testimony about why agents would rather write through standard carriers than through wholesalers. “We'll look at both sides of this,” Mr. Moriarty concluded.

Mr. Levine said that, going forward, he would like to see the department hold more hearings regarding the lines of coverages on the export list, and he added that, in principle, the list should be flexible and dynamic.

Special Reports /

N.Y. Regulators Hear Argument For E&S Export List Expansion

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