BILL NUMBER: S7298
SPONSOR: KAVANAGH
 
TITLE OF BILL:
An act to amend the insurance law, in relation to prohibiting discrimi-
nation because of affordability of residential buildings and residential
construction projects
 
PURPOSE OF BILL:
To ensure that affordable housing is not subject to discrimination in
purchasing and retaining insurance.
 
SUMMARY OF PROVISIONS:
Section one amends the insurance law by adding a new section 2618 which
stipulates that refusing to issue an insurance policy, or modifying an
existing insurance policy for less than the full value of the policy, is
strictly prohibited when based on the inclusion of affordable housing
units in a residential building.
Section two sets forth the effective date.
 
JUSTIFICATION:
In 2021, the Legislature and the Governor enacted a statute (Chapter
790, S5231/A5574 Kavanagh/Cymbrowitz), which directed the Department of
Finance Services (DFS) and Homes and Community Renewal (HCR) to conduct
a study to examine the increasing costs of insurance premiums and
decreasing availability of insurance coverage for affordable housing
developments. The study, published in November 2022, collected stake-
holder feedback from affordable housing developers; analyzed the insur-
ance costs and coverage of affordable housing projects within HCR's
portfolio; and examined factors that may contribute to the underwriting,
rating, and price-setting of premiums of fire and casualty insurance
plans. The report states that although the "Insurance Law does not
explicitly prohibit consideration of whether a property is comprised of,
in part, affordable, subsidized, or Section 8 units when making under-
writing or rating determinations," "insurer inquiries about affordable
housing raise legitimate concerns from stakeholders about the potential
for unfairly discriminatory results."
In the study, affordable housing owners indicated that insurance compa-
nies and producers often ask whether buildings contain affordable,
subsidized, or Section 8 units, and what proportion of the buildings are
such units. Presumably insurers intend to use responses to these
inquiries to make decisions about which properties to insure and at what
price. According to the study, affordable housing owners indicated that
the "reasons that the insurers would not write the risks included an
inability 'to consider NYC Habitational and/or Affordable Housing risks
at this time,' to a lack of appetite for affordable housing developments
in New York City, to only being willing to consider housing with 'no
more than 20%' section 8 housing."
New York Insurance Law allows insurers to consider underwriting and
rating factors that are reasonably related to actual or anticipated
losses to ensure that rates are adequate and that policyholder claims
will be paid. While the Insurance Law explicitly prohibits the use of
certain factors in underwriting or rating, such as race, color, creed,
national origin, disability, and status, it does not explicitly prohibit
consideration of whether a property is comprised of, in part, afforda-
ble, subsidized, or Section 8 units when making underwriting or rating
determinations. However, these insurer inquiries about affordable hous-
ing raise legitimate concerns from stakeholders about the potential for
unfairly discriminatory results. This legislation addresses these
concerns by prohibiting discrimination against affordable, subsidized,
or Section 8 housing in underwriting or insurance policies.
 
LEGISLATIVE HISTORY:
This is anew bill.
 
FISCAL IMPLICATIONS:
Minimal
 
EFFECTIVE DATE:
This act shall take effect immediately.