BILL NUMBER: S186A
SPONSOR: HOYLMAN-SIGAL
 
TITLE OF BILL:
An act to amend the insurance law, the financial services law, and the
banking law, in relation to establishing the insure our communities act
 
PURPOSE:
Climate change is causing a crisis in home and property insurance as
insurers raise rates and cut coverage even as they profit from increas-
ing climate risks that they help to cause. This bill would help limit
rate hikes and coverage cuts by home insurance companies while also
keeping regulated insurers from furthering the climate crisis by insur-
ing and investing in new oil, gas and coal projects.
This bill applies New York's state Community Reinvestment Act to proper-
ty insurance companies in order to maximize investment and benefits for
all New Yorkers; requires public disclosure of insurance rates and other
data at a census tract level; allows the state's regulator to raise fees
on insurance companies that don't adequately serve consumer and communi-
ty needs,; prohibits dropping coverage for one year in the wake of a
climate disaster; prohibits "blue-lining," the practice of discriminat-
ing against customers based solely on location in certain communities;
and regulates New York-based insurers to help prevent global and local
catastrophe due to climate change and associated potentially discrimina-
tory effects.
This bill also aligns New York's insurance regulations with the climate
and equity objectives of the previously-enacted Climate Leadership and
Community Protection Act (CLCPA) of 2019 by: preventing New York-based
insurers from insuring polluting new fossil fuel projects; aligning
insurer policies with science-based objectives for reducing climate-
heating pollution; divesting insurance company investment funds from
oil, gas and coal companies.
 
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 amends state insurance law to prevent New York-based insurers
from insuring more new oil, gas and coal projects, since they are incom-
patible with avoiding climate risk; requires insurers to align their
practices with science-based emissions reductions targets; and requires
them to divest their investment funds from oil, gas and coal. It also
requires the state's insurance regulator, the Department of Financial
Services (DFS) to report on its implementation of this section's
provisions.
Section 2 further aligns state regulation with the state's objectives of
reducing climate risks.
Section 3 requires state regulators to identify communities vulnerable
to blue-lining and prohibits such discrimination. It also grants the
commissioner the authority to prohibit non-renewals of policies in such
communities based on certain conditions.
Section 4 requires at least one year of notice from an insurer to any
policyholder before it may not renew such a homeowner's insurance policy
in certain communities.
Section 5 requires DFS to study climate risks to homeowners and report
their findings to the public and legislature, including recommendations
for regulatory and legislative actions to ensure affordability and
prevent blue-lining.
Section 6 updates New York's state CRA law to cover property insurance
companies in order to establish that insurance companies are obligated
to meet insurance needs of the entire community consistent with their
safe and sound operation, and to evaluate their performance at meeting
this critical need.
Section 7 directs DFS to conduct a study on maintaining affordable
insurance options for disadvantaged communities, including potential
public insurance programs.
Section 8-9 amends the banking law to create a statewide public database
to facilitate the enforcement of Federal and State laws that prohibit
illegally discriminatory insurance practices. Information collected
under this section can also be used for multiple purposes including
analyzing the availability and affordability of insurance coverage,
extent to which covered insurance companies are significant financiers
of the fossil fuel industry and new fossil fuel projects, and whether
the characteristics of insurance coverage require policymakers to take
further action to ensure availability and affordability in areas under-
served by insurers.
Section 10 sets the effective date.
 
JUSTIFICATION:
New York State is experiencing a crisis of housing affordability.
Insurance underlies our housing market. As climate risks and disasters
hit, insurers are paying out ever-greater sums in damages. At the same
time, they are using accelerating climate risk to justify rate hikes and
coverage cuts that further their profits and also fueling the crisis by
insuring and investing policy holder funds into oil, gas and coal
projects. Property and casualty insurers both help cause the climate
crisis and profit from it, even as climate risk threatens to break
insurance markets in the future. New Yorkers are experiencing rate hikes
and coverage cuts. Affordable housing developers are increasingly unable
to find affordable coverage. Renters are also affected when landlords
pass on a share of increasing costs to them.
New York State is also severely threatened by accelerating climate
change, whose primary cause is burning oil, gas and coal. Insurance
companies cause climate change by insuring oil, gas and coal projects as
well as investing policyholder funds into oil and gas companies. After
endangering policy-holders by furthering climate change, insurers raise
rates or entirely abandon local areas or even entire states due to the
effects of the resulting climate crisis: flooding, sea level rise, wild-
fires and extreme weather events, such as hurricanes.
New York enacted the Climate Leadership and Community Protection Act
(CLCPA) to reduce pollution in an equitable manner at the pace and speed
necessary to prevent global, statewide and local catastrophe and avoid
discriminatory practices (known as "blue-lining").
Currently, New York-based insurers are not aligned with the CLCPA's
provisions.
Complaints of rate hikes are already widespread in coastal parts of New
York.
Without proper and careful regulation, insurers may engage in discrimi-
natory practices in their insurance practices, such as discriminating by
race or income.
Many of the most climate-vulnerable parts of New York are inhabited by
predominantly low income families and/or people of color, who will face
greater hardship due to weaker financial resources as well as current
and historic discrimination.
Ending new fossil fuel projects is aligned with the state's CLCPA and
the International Energy Agency (lEA) analysis that no new large-scale
fossil fuel projects are needed to deliver the energy the world needs.
New projects started today are therefore at great risk of becoming
stranded assets that are non-performing financially as renewable energy
takes over.
The insurance industry is primarily regulated at the state level.
Therefore, this legislation would regulate insurers by aligning their
practices with New York's objectives of preventing catastrophe and
discrimination by:
1. Establishing requirements for insurers to make community investments
in disadvantaged communities.
2. Prohibiting New York-based insurers from insuring new oil, gas and
coal projects and conform their policy-writing to science-based climate
targets, as embodied in the Paris climate agreement and existing New
York state law (CLCPA). Because New York-licensed insurers operate
globally, this provision could rule out private insurance for super-pol-
luting projects not just in New York, but some projects worldwide,
depending on their insurer.
3. Updates New York's state CRA law to cover property insurance compa-
nies in order to have a much more comprehensive evaluation of how well
financial institutions are meeting the credit needs of underserved
households and communities, and to recognize the significant role the
availability and affordability of insurance has in community credit
needs.
4. Requiring public disclosure by insurance companies of the rates they
charge and the coverage they provide by census tract. Currently, no
state requires this level of data disclosure from home insurers, making
it difficult to protect communities from unfair discrimination.
5. Prohibiting New York-based insurers from investing in oil, gas and
coal companies. This provision would lock off a major source of finance
to oil and gas companies, such as Exxon, that destroy New York's future.
6. Prohibiting discrimination that is based solely on location aka
"bluelining, making it challenging for insurers to simply drop entire
communities.
7. Creating the authority to block insurers from dropping coverage in
certain areas for a year after a disaster. This is an essential post-di-
saster protection that has been used in California to protect wildfire
victims but few states have it.
 
PRIOR LEGISLATIVE HISTORY:
2023-24: S.9435 Referred to Insurance
 
FISCAL IMPLICATIONS:
TBD
 
EFFECTIVE DATE:
Immediately

Statutes affected:
S186: 107 insurance law, 107(a) insurance law, 3425 insurance law, 3425(d) insurance law
S186A: 3425 insurance law, 3425(d) insurance law, 28-b banking law, 28-b(4) banking law