N.Y. Assemblyman Proposes State-Run Flood Insurance

A New York State assemblyman says he will introduce a bill to create a state-run flood insurance program designed to serve New York homeowners in flood-prone communities.

Assemblyman Phillip Goldfeder (D-Queens) announced the plan on March 1 to introduce new state legislation creating the New York Flood Insurance Association (NYFIA) — a joint underwriting association.

The proposed state-run system, Goldfeder said, would provide homeowners living in flood-prone communities an alternative to rising federally-backed flood insurance premiums “by offering economical, fair and non-discriminatory policies; and protect families from the unfair flood damage claims practices experienced following Superstorm Sandy.”

“Our families were victimized by Sandy and then again by the insurance companies and [National Flood Insurance Program] who were supposed to help. Insurers have fought Sandy claims and challenged homeowner’s needs, adding insult to injury for those who went through so much and who still struggle to recover,” said Goldfeder. “The New York Flood Insurance Association will be a strong system with shared risk that will give families a new choice for flood coverage and help keep premiums affordable so that they can remain strong and secure in their own homes.”

Modeled on NYPIUA

Goldfeder, a member of the Assembly’s Committee on Insurance, said the plan is modeled on the New York Property Insurance Underwriters Association (NYPIUA), a joint underwriting association created in 1968 under the laws of the state of New York to meet the basic insurance needs of the public.

More recently, Goldfeder said, other states have taken similar steps to protect families following hurricanes.

“In 1993, the Florida state legislature created the Florida Hurricane Catastrophe Fund to lower premiums by providing partial reimbursements to insurers for catastrophic hurricane losses after Hurricane Andrew,” said Goldfeder. “In 2002, Florida created the Citizens Property Insurance Corporation as a joint underwriting association to expand insurance policy options for homeowners finding it difficult to insure their properties.”

He said the legislation would amend New York State insurance law to create the New York Flood Insurance Association as a choice for consumers when flood insurance is unaffordable or difficult to obtain.

Under the proposal, the New York Flood Insurance Association’s membership would be comprised of state-approved insurers and would be governed by the Superintendent of the State Department of Financial Services and a board of 13 directors.

Association members would have to follow a plan of operation requiring them to provide “economical, fair and non-discriminatory” flood coverage to policyholders and follow “reasonable and objective” underwriting standards. Any homeowner or renter who has made a reasonable effort to find coverage on the private market could be eligible to apply to the association, Goldfeder said, for coverage of up to $1.5 million for property and contents.

The association’s policy premiums would be capped at certain percentages of private market policy rates, based on the class of property. The association would also have the power to distribute any premium gains and losses in excess of 1 percent evenly among members.

“This association will ensure that rising flood insurance premiums do not price families out of the neighborhoods they know and love,” said Goldfeder. “I thank Department of Financial Services Superintendent Benjamin Lawsky for his tireless work to protect New York families and I look forward to working with him, my colleagues in the Assembly and on the Insurance Committee to finally give families the choice they deserve when it comes to buying protection from floods.”

March 9, 2015


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