BILL NUMBER: S9281
SPONSOR: SKOUFIS
 
TITLE OF BILL:
An act to amend the insurance law, in relation to requiring rate filings
for prior approval for commercial property insurance, commercial general
liability insurance, and personal residential property insurance; to
amend the insurance law, in relation to requiring insurers to provide
explanations for certain premium increases; and to amend the insurance
law, in relation to the determination of a benchmark loss ratio and
investment return benchmark for certain insurers
 
PURPOSE:
This bill would eliminate the practice of 'file and use' in rate-setting
for commercial and personal residential property insurance, as well as
requiring insurers to explain premium increases for consumers and to
re-file rates with DFS when their demonstrated profitability exceeds
certain benchmarks.
 
SUMMARY OF PROVISIONS:
Section 1: Eliminates the practice of 'file and use' by amending para-
graphs 12 and 13 and the closing paragraph of subsection (b) of section
2305 of the insurance law, to include commercial property insurance,
personal residential property insurance, and commercial liability insur-
ance to the list of insurances requiring 'prior approval.'
Section 2: Amends insurance law by adding a new section 2354 which
requires insurers to provide a written explanation for any premium
increases upon renewal.
Section 3: Amends insurance law by adding a new section 2355 which
instructs DFS to study and establish benchmarks for actual loss ratio
and investment returns, instructs that any insurer whose actual loss
ratio falls below said benchmark two years in a row must re-file their
rates with DFS, and further requires DFS to authorize a rate reduction
in the event that the insurer's investment returns exceed their corre-
sponding benchmark.
Section 4: Sets the effective date.
 
JUSTIFICATION:
In August 2025, the Senate Committees on Insurance, Housing, and Inves-
tigations & Government Operations jointly initiated an investigation
into the affordability and accessibility of residential property insur-
ance. Among numerous other findings, the Committees uncovered a concern-
ing pattern of sustained, excessive profitability among insurers in the
New York market.
Data provided within the National Assbciation of Insurance Commission-
ers' (NAIC) 2023 'Profitability by Line by State' report illustrate that
New York's insurers have been achieving a nearly 16% profit on under-
writing for homeowners (HO) multi-peril coverage, and a nearly 18%
return on net worth for this coverage. These levels have remained more
or less consistent over the past ten years, and only six other states
posted higher rates of profit/return for homeowners multi-peril in 2023.
Nationally, carriers have fared far worse than in New. York, experienc-
ing an 11% loss on underwriting for HO multi-peril, and a York is expe-
riencing persistently high levels of profitability that could underscore
inadequate attraction of competition or, worse, that New Yorkers are
footing increasingly higher bills divorced from the actual risks they're
facing here on the east coast.
This bill tackles issues of insurance affordability and rate-setting in
several ways:
First, it eliminates the longstanding practice of 'file and use' for
commercial and personal residential property insurances as well as
commercial liability insurance, wherein insurers file their proposed
rates with DFS but, by law, can put these rates in place immediately,
without receiving. prior approval from DFS. This bill will require these
types of insurance to receive `prior approval' before being implemented
for consumers, just as personal vehicle insurance rates, title insurance
rates, and more are currently required. By eliminating 'file and use,'
consumers will be protected from overzealous rate-setting, while ensur-
ing prompt evaluation of all rates by DFS.
Second, it requires that insurers proactively justify any premium
increases to consumers when their policy is up for renewal. Currently,
consumers do not have a right to such an explanation, and are often left
confused and angry when they see their annual premium skyrocketing with-
out a single claim to their name. This bill will force insurers to take
responsibility for premium increases and provide clarity and transparen-
cy in the process.
Third, it requires DFS to establish two separate benchmarks: one for
actual loss ratio, one of the figures used most often to measure a
company's profitability; and one for investment returns, another key
measure of profitability. If an insurer's actual loss ratio falls below
its corresponding benchmark, and their investment returns fall above the
corresponding benchmark two years running, DFS must automatically
require a rate reduction for the insurer, putting more money back in New
York property owners' pockets.
While regulators and lawmakers have a responsibility to ensure a thriv-
ing and profitable statewide insurance industry, they must balance this
with their responsibility to protect the financial interests of New
Yorkers.
 
LEGISLATIVE HISTORY:
Senate
New bill
 
FISCAL IMPLICATIONS:
None.
 
EFFECTIVE DATE:
This act shall take effect immediately; provided, however, that section
one of this act shall take effect on the one hundred eightieth day after
it shall have become a law; and provided further, however, that section
two of this act shall take effect on the ninetieth day after it shall
have become a law.