N.Y. Orders Two Insurers to Offer Homeowners Renewals

New York State insurance regulators ordered two insurance companies to offer to reinstate 260 homeowners policies it says were improperly canceled or nonrenewed.

Homesite Insurance Co. and Security Mutual Insurance Co. canceled policies on unoccupied homes and coastal area homes and prematurely nonrenewed others throughout the state, according to a department announcement. The state acted after four affected homeowners filed complaints with insurance regulators.

"This proves that individual consumers can make a difference. Every year, the department closes more than 60,000 cases brought to us by consumers," Insurance Superintendent James Wrynn said in a statement.

Under New York insurance law, an insurer may not consider non-occupancy as the sole factor in issuing a mid-term cancellation, according to the department. Non-occupancy may be considered only if it is among other factors that increase risk to a property. State regulators ordered Security Mutual to reinstate 20 policies canceled because homes were unoccupied, and Homesite another six for the same reason.

The department reversed 174 Homesite terminations because the policyholders did not receive legally mandated information about the availability of coverage through the New York Property Insurance Underwriting Association. Some of the termination notices also failed to include information about the Coastal Market Assistance Program. C-Map is administered by NYPIUA to help homeowners obtain insurance in coastal areas.

In mid-December, the department also directed State Farm Insurance Co. to offer 113 Long Island homeowners the opportunity to renew their policies. State Farm acted improperly when it failed to provide notification of NYPIUA and C-MAP, according to the department.

Insurers notifying consumers that policies are not being renewed must state the specific reason for the nonrenewals. These notices must be sent to homeowners between 45 and 60 days prior to the effective date that the policies will not be renewed. Insurers are permitted to nonrenew up to 4% of their homeowners' policies annually on a statewide basis.

Homesite also was directed to offer to renew 60 homeowners' policies that the company initially decided to terminate before the end of the policy periods. Under the law, homeowners' policies must remain in effect for a minimum period of three years, except in certain situations, such as when consumers fail to pay premiums.

Homesite and Security Mutual could not be reached for comment.

Security Mutual Insurance Co. currently has a Best's Financial Strength Rating of B++ (Good) with a stable outlook. Security Mutual is a nonassessable advance premium cooperative insurance company writing business exclusively in New York. Primary lines of business include personal lines excluding automobile with some commercial lines. Approximately 68% of the business classified as commercial multiple peril consists of landlord package policies. Both homeowners and landlord package policies are written on a three year basis, according the BestLink.

The regulatory action was specifically against Homesite of New York, a subsidiary of Boston-based Homesite Group.

Homesite Group distributes its products through the Internet, call centers and selected licensed agents and producers. It writes homeowners, condominium owners and renters insurance in 45 states and the District of Columbia.

Homesite Insurance Company of New York is not rated by A.M. Best and neither is its parent, Homesite Group.

The top five writers of homeowners multiple peril insurance in New York in 2008, according to BestLink, were: Allstate Insurance Group, with 17.1%; State Farm Group, 15.8%; Travelers Group, 10.9%; Chubb Group of Insurance Cos., 9.9%; and Liberty Mutual Insurance Cos., 7.0%.

(By Sean P. Carr, Washington Correspondent: [email protected])