The Business Council opposes this legislation which grants the Superintendent of the Department of Financial Services the authority to establish standards for the operation of hurricane windstorm deductibles. The Superintendent would have broad regulatory authority to determine when windstorm insurance deductibles are triggered.
Since Hurricane Irene and Superstorm Sandy hit New York in 2011 and 2012 respectively, there has been a debate as to what activates ("triggers") the applicability of windstorm deductibles. Many victims of the storms felt as if their policies did not provide the types of coverage they expected.
We believe that this measure, while well intended, is not in the best interest of either the consumer or the insurance provider. This bill seeks to create a uniform standard trigger for a certain type of event that is best left to be determined by the competitive marketplace. Insurers try to tailor policies to the consumer's needs and level of risk. A coastal homeowner has a different set of insurance needs as it pertains to wind/hurricane coverage than one who lives inland. This loss of flexibility in determining the appropriate trigger could cause insurers to cease writing policies in coastal areas where there is a much higher level of risk.
Having a uniform trigger for initiating a windstorm deductible will also lead to increased consumer costs. This will occur because without the ability to set their own deductible triggers for windstorms, insurers will not be able to adequately account for the total risk they are underwriting thus leading them to raise premiums.
This bill in unnecessary and will only lead to increased costs for insurance customers and fewer providers offering this type of coverage. For these reasons the Business Council urges the legislature to disapprove A.2729/S.2932.