New York lawmakers are moving to establish a state-backed catastrophe fund designed to cushion insurers from massive disaster losses.
Assembly Bill 9231, introduced on Nov. 3, would create the New York State Catastrophe Fund Authority and set aside $10 mn to get it started.
The proposal would require every insurer writing covered property policies in the state to enter reimbursement contracts with the fund.
In return, carriers would pay annual premiums based on their written premium volume, expected losses, and the level of protection they want.
The authority would then reimburse part of insurers’ catastrophe losses once they exceed preset thresholds.
Coverage would extend across residential and commercial property, including farms, condos, mobile homes, and renters’ policies.
The bill sets initial retention limits between $6 bn and $15 bn, adjusted each year in line with statewide premium shifts. Losses beyond or below those levels would remain the insurer’s responsibility.
Qualifying events include windstorms, earthquakes, ice storms, and “wind-borne water damage” – essentially any major natural disaster the governor designates as catastrophic.
To fund future payouts, the authority would be able to issue revenue bonds and impose emergency assessments on carriers.
Those assessments would be capped at 2% of an insurer’s gross written premium per event, rising to 4% if the governor declares a state of emergency. The total annual limit across three or more disasters would top out at 10%.
Lawmakers say the fund aims to expand capacity in the private insurance market, stabilize premiums after large-scale catastrophes, and shield New York’s economy from the ripple effects of major losses.
The bill is now before the Assembly’s Insurance Committee, where legislators will decide whether to move it forward.
