City Coming Back... On Foot? Taxi And Van Underwriting Issues Threatens New York City's "Return To Normal".

AuthorAcunto, Steve
Position[FOREWORD]

Alooming crisis could slow the comeback of New York City removing wheels from the equation. An actuarial report has hit at American Transit Insurance Company's reserves, putting the main underwriter of critical transportation classes into a dubious spot. ATIC has long been considered by many as a kind of "assigned risk" plan, an insurer of last resort for a key industry in its way, and its results show the scars.

The Brooklyn, N.Y.-based carrier sells insurance to taxi and livery fleets and commercial vehicles, mostly in New York City and has done the City and its citizens a good service for many years.

Now that the system - and ATIC - appear to be stressed, there is no easy relief in sight. Based upon the DFS' petition contending that Park Insurance is insolvent, the court has ordered that it be liquidated.

Other enterprises appear limited as well, leaving ATIC with a daunting job The Park case may hold a partial key to the solution if the DFS frees it and lets it back into underwriting.The broader solution however must come from the legislature and from regulators. Inaction in this is a formula for crisis.

One actuarial report on ATIC (S & P) concluded that the company's provision for reserves to cover unpaid losses and loss adjustments falls more than $500 million short of what he would consider a reasonable level. In a statement of actuarial opinion reported widely in the media the author holds that the $190 million provision for unpaid losses and loss-adjustment expenses made by American Transit Insurance Co. is $508.8 million less than the $698 million he considered the minimum necessary.

The author speculated that American Transit's statutory policyholder surplus would render it insolvent by $430.9 million. While the company reported a surplus of $91.8 million as of March 31, increasing its reserves to the independent actuary's low point would reduce the level of insolvency to about $417 million.

Yet the Company is alive and at work, despite this dire outlook. Rumors of its demise have been around for some years. Problem is, no one seems to be looking at alternatives with any urgency.

Park Insurance is arguing forcefully that the DFS is effectively removing a major option for affordable insurance coverage and is dismantling its niche industry, it says. According to a statement supplied by Park:

"New York's van riders - who are overwhelmingly Black, Brown, low-income, and elderly - would need to pay higher rates for alternative...

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