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Guarding Against Inequities in the Residential Insurance Market and Insurance Company Investments in Underserved Areas of New York State


To review the statistical information available to policymakers, regulators and consumers with regard to the availability and adequacy of coverage in the residential insurance market and to determine whether adoption of A.11512 would assist in guarding against inequities; and to review available information on insurance company investments in New York State and to discuss how adoption of A.7537-A/S.7362 would impact economic development, affordable housing development and other activities in underserved areas of the state.

Assembly Hearing Room
250 Broadway - Room 1923
New York, NY 10007
Friday, October 20, 2006
11 AM


1. Guarding Against Inequities in the Residential Insurance Market

The availability of affordable and quality residential insurance coverage is a cornerstone of vibrant communities. While there is little dispute that it is easier to get good quality coverage in some neighborhoods than others, there is a vigorous debate over the cause of this disparity and possible solutions. Critics of the insurance industry point to redlining and discrimination as a cause, while industry officials say greater risks from fire, theft and other factors account for the inequities. Confronted with a similar debate in the area of mortgage lending, Congress enacted the Home Mortgage Disclosure Act (HMDA) in 1975 to require banks to provide detailed disclosure of mortgage lending activity by census tract.

2. Insurance Company Investments

Like banks, insurers control vast amount of capital and accumulate income by increasing the spread between investment earnings on the premiums they collect and the benefits they must pay consumers. According to the most recent state Insurance Department annual report, New York-licensed life insurers reported nearly $2 trillion in admitted assets in 2003, and licensed property/casualty insurers took in over $287 billion in premiums in 2003 and maintained over $800 billion in admitted assets. But unlike banks, which are subject to state and federal Community Reinvestment Act (CRA) provisions, insurers have no responsibility to invest in their communities. Annual reports required of life insurers show that roughly 1/3 of life insurers make no investments in New York, and those that do invest almost exclusively in corporate and government bonds and commercial real estate.

Please see the list of subjects to which witnesses may direct their testimony, and for a description of the bills which will be discussed at the hearing.

Persons wishing to present pertinent testimony to the Committee at the above hearing should complete and return the reply form as soon as possible. It is important that the reply form be fully completed and returned so that persons may be notified in the event of emergency postponement or cancellation.

Oral testimony will be limited to 10 minutes' duration. In preparing the order of witnesses, the Committee will attempt to accommodate individual requests to speak at particular times in view of special circumstances. These requests should be made on the attached reply form or communicated to Committee staff as early as possible. In the absence of a request, witnesses will be scheduled in the order in which reply forms are postmarked.

Ten copies of any prepared testimony should be submitted at the hearing registration desk. The Committee would appreciate advance receipt of prepared statements. In order to further publicize these hearings, please inform interested parties and organizations of the Committee's interest in hearing testimony from all sources.

In order to meet the needs of those who may have a disability, the Assembly, in accordance with its policy of non-discrimination on the basis of disability, as well as the 1990 Americans with Disabilities Act (ADA), has made its facilities and services available to all individuals with disabilities. For individuals with disabilities, accommodations will be provided, upon reasonable request, to afford such individuals access and admission to Assembly facilities and activities.


  1. Have you observed or is there reason to believe that insurers currently offer different types of insurance in various neighborhoods or communities or handle cancellations or non-renewals differently?

  2. What information is available to the public regarding residential insurers' activities and how useful is this information? What information is available in other states?

  3. The New York Property Insurance Underwriting Association (NYPIUA) is the insurer of last resort for home and business owners who cannot obtain coverage in the voluntary market. Which communities in New York State, as identified by US Postal zip code, have the highest concentrations of NYPIUA coverage? From an underwriting perspective, how do these communities differ from those with low concentrations of NYPIUA policyholders?

  4. Has the HMDA benefited low-income communities and improved lending practices? If so, how?

  5. A.11512 would require residential property insurers to report annually on the types of coverage offered, premiums collected, losses paid out, denials of applications for coverage, non-renewals and other information by census tract. How would this information assist consumers, policymakers and insurance regulators in guarding against disparities in the residential insurance market?

  6. Please comment on any aspect of A.11512.

  7. Have state and federal CRA requirements benefited underserved communities in NYS? What activities have been undertaken as a result of CRA investments?

  8. A.7537-A/S.7263 would create an Insurer Fund for Underserved Neighborhood/Rural Area Development (IFUND) Corporation and require insurers to contribute investment capital in proportion to their profits. The IFUND Corporation in turn would invest the capital in affordable housing, community service facilities such as child care centers and health clinics, family farms, Brownfields clean-up, medical information technology and small businesses. What investments would be available to insurers within these criteria? Are there investments in these and other areas which offer reasonable rates of return? What tax advantages may be available for IFUND-eligible investments?

  9. Please comment on any aspect of the IFUND legislation.


Persons wishing to present testimony at the public hearing on October 20, 2006 are requested to complete this reply form as soon as possible and mail it to:

Renee Skorupski
Committee Assistant
Assembly Committee on Insurance
Room 520 - Capitol
Albany, New York 12248
Email: skorupr@assembly.state.ny.us
Phone: (518) 455-4928
Fax: (518) 455-5182

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