The New York State Legislature’s most recent session will be remembered by insurance lobbyists more for what did not get accomplished than for what did.
The Republican-controlled Senate and the Democrat-led Assembly once again missed an opportunity to help calm a growing homeowners insurance crisis in the downstate region, according to the state’s insurance agents.
They also bypassed reforms of the state’s workers’ compensation system sought by Gov. George Pataki, business and insurance leaders.
Also, three different bills on the reinstatement of flex rating for private passenger auto insurance were introduced by the Senate in an attempt to get the Assembly interested in this issue but none of the bills were advanced before the session closed on June 23.
With insurance companies such as Allstate, MetLife and others restricting homeowners coverage in Westchester County, New York City and Long Island, the Independent Insurance Agents & Brokers of New York, Inc. says lawmakers could have eased the situation by permanently extending the life of the residual market property insurer.
However, as they have done in years past, lawmakers only granted the New York Property Insurance Underwriting Association a one-year extension. NYPIUA provides fire, vandalism and other coverage to those who cannot obtain them in a standard market.
The uncertainty over the future of the NYPIUA has consequences that are felt in the marketplace, agents maintain. “The financial markets do not take NYPIUA seriously due to its temporary status,” said Sharon H. Emek, IIABNY chair and a managing director of CBS Coverage Group in New York City. “Because of its dependence on the New York State Legislature, NYPIUA has lapsed in the past, making it unable to obtain certain financial commitments.”
For years, NYPIUA has been a political hostage between the Republicans who control the Senate and Democrats who rule the Assembly. A bill to make NYPIUA permanent recently passed the Assembly, but was unable to survive obstacles in the Senate. The Legislature finally adopted a one-year extension.
“We are disappointed with a number of senators whose short-range views on this crisis will eventually hurt homeowners in the downstate region,” said Emek.
Lawmakers also extended provisions that allow auto insurers to cancel or non-renew up to two percent of their business on an annual basis. This provision was scheduled to expire on June 30, 2006.
Workers’ comp inaction
Lawmakers did not take seriously a workers’ compensation reform plan advanced by Gov. Pataki that he said would reduce costs for businesses by more than 15 percent, while increasing benefit levels for injured workers by 25 percent.
This was not the first time Pataki has waded into the workers’ compensation arena. His latest recommendations come on top those he fought for in 1996 that are credited with cutting costs by 25 percent on average. He proposed a series of additional reforms in 2004, but the Legislature failed to act on them.
The industry worked with New York Compensation Action Network, an industry and business workers compensation reform coalition, to advance this session’s workers compensation reform to no avail.
Kristina Baldwin, regional manager and counsel for Property Casualty Insurers Association of America, put a positive spin on the effort, stating, “While workers compensation reform did not get passed this session, PCI and coalition partners made progress in raising the prominence of this issue.”
While the Legislature didn’t find the time to address broad workers compensation changes, it did manage to pass legislation, which increases the threshold for employer approval of certain treatments in the workers compensation system from $500 to $1,200.
The industry has urged Pataki to veto this legislation, arguing that it only worsens a system that already has the second highest claims costs in the nation.