The Long Island Homeowners Insurance Mess Continues

BY AARON STEIN

It's been a couple of weeks since I actually have had the time to post here on the blog. Our office has been swamped with calls and visits. The chief reason this time is that another homeowners insurance carrier has pulled out of Long Island.

This time it's a carrier who specialized in waterfront property, and rather than make a decision to gradually lower their concentration of customers on Long Island for home insurance, as Allstate did, this company was put into receivership by the Texas Department of Insurance and was required to cancel ALL their policies in New York as of August 24, 2006.

The company, Vesta Insurance otherwise known as Shelby Casualty was a relative newcomer, having only entered the home insurance market in the past few years. But almost all their policies were for homes right on the water, and so between that and the fact that they all are running out the same day, it's been hectic for all agents trying to find other carriers. About 8600 homeowners insurance policies were affected.

On the plus side, recent analysis of weather patterns now suggests that we may NOT be in for a more active storm year than usual, and that the chances of a Katrina-sized storm hitting us this year may actually be lower than normal. This is good news, but it still does not mean that there is NO chance, and it looks like when (not if) such a storm does hit, the dislocation in the Long Island insurance market is going to be tremendous.

Meanwhile there was a good opinion piece in this past Sunday's Newsday considering whether hurricane/windstorm needs to be put in the same category as flood insurance, unemployment, and several other key types of insurance that are considered potentially so large that only the government has the resources to assume the risk, based on their taxing power.

This article is fine as far as it goes, though it does not get into the fact that building codes also need to be changed, people need to take proactive steps to protect their property, and a number of other issues need to be addressed. This problem is not going to go away, and it's not going to be solved simply by insurance or government support of insurance carriers.

As always, for more information on flood insurance and homeowners insurance on Long Island, visit our sites at http://www.nyinsurancewithservice.com/ and http://www.floodinsuranceny.com/.