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REPORT STUDIES NEED FOR NEW YORK CATASTROPHE FUND FOR HOMEOWNERS INSURANCE

Concludes Fund Not Needed Because Of Dynamic Marketplace

New York, February 8, 1999

Superintendent of Insurance Neil D. Levin today issued a report that examines the state of the homeowners’ insurance market in New York. The report, among other items, studied the need for a State Catastrophe Fund and determined that such a fund is not warranted because of New York’s dynamic marketplace. A State Catastrophe Fund would sell hurricane and other similar coverages directly to consumers or provide reimbursement to insurers for a portion of their catastrophic losses.

The report was prepared by the Temporary Panel on Homeowners’ Coverage which was legislatively mandated in 1996. Superintendent Levin chairs the panel. The other members of the panel are appointed by Governor Pataki and various members of the Legislature.

Superintendent Levin said, "There is good news for both the insurance industry and the consumer. The study shows New York’s homeowners’ insurance marketplace is very dynamic. There are innovative products and alternative mechanisms available. Consumers can feel comfortable that their insurer is sufficiently positioned to absorb the impact of a major hurricane should one strike. There is no need for governmental intrusion in this area."

The report concludes that the establishment of a catastrophe fund is unwarranted at this time for the following reasons:

  • The availability of homeowners insurance in coastal communities, with few exceptions, has rebounded as a result of efforts by the New York Insurance Department and the insurance community through both legislative initiatives and regulatory programs.
  • The number of homeowners insurance policies written by the insurer of last resort - the New York Property Insurance Underwriting Association (NYPIUA) - has leveled off and the number of new policies is declining.
  • There is an overabundance of capacity in the reinsurance market, which is driving down catastrophe pricing.

Additional capacity from the capital markets is growing and expected to expand further.

A copy of the report is available by calling the Department toll-free at 1-800-342-3736 or by visiting the Department’s website at www.ins.state.ny.us. Click here to view the report.

 

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