ALBANY. N.Y. -- Insurance companies that issue homeowners policies would only be allowed to non-renew 2% of their policies at the end of a policy-period under a bill (S. 17) sponsored by Senator Guy J. Velella (R-C, Bronx/Westchester).
"This should help bring stability to a marketplace that sees too many cancellations each year when insurance companies have to pay out on claims," Velella said.
Under current law, this "2% Rule" does not apply to personal line homeowners policies. It does, however, apply to automobile insurance in New York State.
"If signed into law, this bill would close a loophole in the law that allows homeowners insurance carriers to do major withdrawals in rating territories in which they consider too costly to do business," Velella said.
Velella said he found out January 4 that Allstate is planning to non-renew 20, 000 homeowners policies in Florida starting in April of this year. This bill would prevent such occurrences in New York State.
Velella said an example of a threat of major withdrawals came during the past couple of years when downstate coastal areas were hard hit by torrential storms. After thousands of homeowners filed claims, some insurance companies sought to pull out of the area totally. That left homeowners in a desperate search for new coverage.
"The '2% Rule' helped automobile policyholders and should do the same for homeowners," Velella said. "I introduced this bill early in the legislative session in hopes of getting it enacted into law as quickly as possible."
Velella's reference to Allstate in Florida is accurate according to the "Agents Confidential" bulletin of the Florida Association of Insurance Agents. Reporting in its January 6 edition, the bulletin notes that Allstate had confirmed its non-renewing of around 20.000 policies in six Tampa Bay-area counties. The company said, according to the FAIA bulletin that Allstate noted its concern over its...