Senate Bill S331

                                 BILL NUMBER:  S331

 TITLE OF BILL :
An act to amend the insurance law, in relation to reducing the
percentage of policies that an insurer can cancel or not renew without
state approval, to require insurers to demonstrate potential risk or
loss to justify such cancellations or non-renewals before such
approval shall be granted, to authorize the superintendent of
insurance to have oversight over participation levels in a coastal
market assistance program and to limit notices of intent by insurers


 PURPOSE :
This bill will protect homeowners' insurance policyholders by
preventing insurers from denying some late-reported claims,
authorizing the Superintendent of Insurance to have oversight over
mandatory participation or increased levels of participation in a
coastal market assistance program and limiting the notices of intent
by insurers.

 SUMMARY OF PROVISIONS :
Section 1: Amends Section 2351 of the Insurance Law to add a new
Subsection (d)

(1) To reduce the percentage of policies (from 4% to 2% in a single
year and from 20% to 10% over a five year period) that an insurer can
              

cancel/non-renew without state approval and also requires insurers to
demonstrate potential risk/loss to justify such cancellations or
non-renewals before such approval shall be granted by the department.

(2) To stipulate that for every two new homeowners' policies, which an
insurer voluntary writes in each territory, the insurer will be
permitted to non-renew or conditionally renew one additional homeowner
policy in that territory in excess to the two percent limit described
in Section (d) (1); this will be subject to a formula developed by the
Superintendent.

(3) To provide that if an insurer intends to reduce the volume of
policies written in excess of the limits specified in (d) (1) the
insurer must file a plan regarding the proposed reduction with the
Superintendent, which demonstrates potential loss or risk justifying
the additional cancellations.

Section 2: Adds a new Section 2352 to direct the Insurance Department
to conduct a study on the profitability of the property/casualty
insurance industry, specifically reviewing the reasons and rates at
which they increase their premiums or terminate coverage in markets
less impacted by natural disasters, and to report such findings to the
Governor and the Legislature.

Section 3: Section 3425 of the Insurance Law is Amends Section 3425 of
the Insurance Law to add new Subsection (r) (1) which authorizes the
Superintendent of Insurance to establish and regulate the Coastal
Market Assistance Program (CMAP) to facilitate the placement of
homeowners' insurance (2) which provides the Superintendent to
consider the following criteria when making any determination pursuant
to (r)(1): the extent and nature of competition; size and significance
of the coverage; availability of adequate limits of coverage; efficacy
of CMAP administered by the Superintendent including but not limited
to: actual placement and demand for placement of coverage through the
programs at the time the determination is to be made; rate of growth
in policies placed through the New York Property Insurance
Underwriting Association (NYPIUA); reinsurance availability; extent
and nature of consumer and producer complaints to the insurance
department, steering committee and administrator of a CMAP; extent of
denials and restrictions of coverage: volume of cancellations and
nonrenewals; or changing conditions in the economic, judicial and
social environment (3) which stipulates that with respect to any
action taken the Superintendent if he/she determines in a written
finding, after a hearing on a record, that ready availability and
placement of meaningful homeowners' coverage has been restored, or
that rescindment of any action will best facilitate the placement of
homeowners' insurance, the Superintendent may rescind the action.

Section 4: Establishes that the effective date should be immediate;
provided however, that the amendments to Section 2351 of the Insurance
Law is made by Section 1 of this act will not affect the repeal of the
section and will be deemed repealed therewith.

 JUSTIFICATION :
Insurers in New York State have been canceling homeowners' insurance
policies for many residents because of the possibility of a major
catastrophe (specifically affected areas include what is described as
"coastal areas" of the State, on Long Island and New York City).
Allstate, which controls more than 25% of the market in downstate New
York has led the way. In 2007, Allstate, announced cancel or "non
renew" more than 26,000 homeowner's insurance policies in the coastal
portions of New York City, Westchester County. and Long Island. Other
insurance companies have taken similar actions, which have left many
homeowners without insurance. The recent action by insurance companies
does not only leave many homeowners without homeowners' insurance but
will dramatically increase premiums throughout the State.

Current Insurance Law does not require insurance companies to
demonstrate any kind of financial or actuarial rationale for dropping
tens of thousands of its policyholders. This legislation will provide
protection of homeowners' insurance policies by limiting notices of
intent from 4% to 2% in a single year and from 20% to 10% over a
five-year period.  This measure will ensure that when insurers depart
from this segment of the market, it is conducted in an orderly manner
to minimize not only the disruption caused by homeowners searching for
replacement coverage, but the increase in premiums.

The creation of CMAP will also provide greater protections for
homeowners. CMAP is a voluntary program established by the
Superintendent in which insurers agree to take on a limited number of
new policies in designated coastal areas. CMAP was designed to
accommodate consumers having difficulty finding coverage, including
those who have had to resort to New York Property Insurance
Underwriting Association (NYPIUA) since 1993 because of the proximity
of their property to the shore. Consumers, agents and brokers have
complained of difficulties using CMAP. Many consumers who are eligible
for coverage through CMAP report being unaware of its existence.  This
bill will provide that with respect to a CMAP the Superintendent of
Insurance will facilitate and regulate the placement of homeowners'
insurance policies. By providing the Superintendent of Insurance with
the authority to make improvements to CMAP operations and ensuring
that consumers who may be eligible for CMAP coverage are made aware of
its availability, CMAP will be used to its fullest potential and more
consumers will have access to more complete coverage than that offered
by NYPIUA.

 LEGISLATIVE HISTORY :
2007/2008 - S.7940  Remained in the Senate Committee on Insurance

 FISCAL IMPLICATIONS :
None.

 EFFECTIVE DATE :
Immediately.