Legislation being mulled in New York could be putting the Empire State "on a path to the bottom" of a list of states with the worst insurance markets.
Kristina Baldwin, vice president for the Property Casualty Insurers Association of America (PCI) says a group of nine insurance bills—one of which looks to prohibit the anti-concurrent causation clause language in homeowners policies—were spawned by Superstorm Sandy, but are also a simple case of trying to fix what isn't broken.
"We understand lawmakers' desire to pass something to help those devastated by Sandy and we are sympathetic," says Baldwin. "But the fact is, the private industry did very well in handling claims following the storm and these bills could hurt the people they are trying to protect.
One bill restricts an insurer's ability to cancel or not renew a homeowners policy. Another is aimed at reducing timeframes to settle claims. There is also a measure to allow individuals to bring lawsuits against an insurer, claiming a violation of insurance law—which is typically done by the regulator.
The bills have been adopted by the state Assembly and have Senate sponsors. There are two weeks left in the legislative session, and it is not known if state senators will bring the measure to the floor.
The industry is urging them not to. Baldwin says if these bills were to become laws, "There would be a serious availability and affordability issue in New York—particularly in coastal areas."
She likens the tone in New York to that in Florida after 1992′s Hurricane Andrew, when laws were made with the intent to help constituents. Instead, the laws significantly shrank the insurance marketplace. Baldwin says 40 less insurers existed in the Sunshine State than before legislation was passed.
The American Insurance Association says the private industry has closed 95 percent of Sandy-related claims and paid more than $5 billion to policyholders—with a 1 percent complaint rate.
"While intended to serve policyholders, these bills would simply open the floodgates for even greater litigation after a catastrophe thereby increasing costs without providing significant benefits to policyholders who already have substantial rights and protections under existing law," says Gary Henning, Northeast region vice president for AIA, in a statement.
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