Although New York has been fortunate to escape the path of a catastrophic hurricane in recent years, the state’s Insurance Department is taking measures to prepare itself for such a disaster. New York is contemplating a plan that would require insurers to fund a pool that would cover claims from disasters such as hurricanes. In addition, insurance companies soon may not be permitted to apply a special deductible for wind damage unless a hurricane actually makes landfall in New York.
These actions come as a result of increased volatility in the market for property insurance in New York, including some insurers dropping coverage to those customers most vulnerable to storm damage.
In the wake of Hurricane Andrew in 1993, Florida created a similar catastrophe fund which is financed by premiums charged to insurers, investment earnings and emergency assessment. New York ranks second only to Florida in the amount of insured coastal property in the United States.
Thanks to Chris O’Leary for his contribution to this post.
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