The New York State Department of Financial Services is encouraging property-casualty insurance carriers to offer their homeowners insureds free or discounted loss mitigation tools and services. In a new Circular Letter, the department also encouraged carriers, rate service organizations (RSOs, such as the Insurance Services Office,) and the New York Property Insurance Underwriting Association (NYPIUA) to file premium discounts for insureds who use the devices and services.
The May 23 letter, signed by Deputy Superintendent of the department’s Property Bureau Bernard Ganley, noted difficulties in the current insurance market. The purpose of the Circular Letter, he wrote, was “to reduce risks and costs to ensure a more affordable and resilient market.”
The letter acknowledged the limitations in New York’s law against rebating and discrimination. That law places a $25 limit on a benefit not specified in a policy. Carriers will have to specify in their policies any devices or services that have market values above that amount. In addition, they must have a legitimate connection to the insurance and be “necessarily or properly incidental” to the carrier’s insurance business. The letter gave smart water monitor and shutoff devices and electrical fire sensors and monitors as examples of devices that would receive approval. Carriers who want to add these benefits to their policies will be expected to specify:
- What is being offered.
- Who is paying for it.
- How much an insured must pay.
The department also called on carriers, NYPIUA, and RSOs to file “actuarially appropriate discounts to insureds for the installation of devices or systems that mitigate or prevent losses, including, but not limited to, smoke alarms, sprinkler systems, fire extinguishers, and deadbolt locks.”
The letter predicted that offering these devices to insureds “will strengthen the financial condition of insurers, lower costs for insureds, and result in a more stable and resilient insurance market.”
Agents and brokers may start to see carriers offering these programs over the next 12 to months.