New York Governor Kathy Hochul has signed a landmark parametric insurance bill into law, marking a significant shift in how insurance for weather-related events will be defined and regulated in the state. The bill, A.10344, aims to modernize the insurance landscape by incorporating parametric insurance, which provides payouts based on the occurrence and measurement of specific events rather than assessing actual losses incurred.
Parametric insurance is a type of coverage that pays out a predetermined amount based on predefined parameters, such as the intensity and location of a natural event like a windstorm, earthquake, or flood. This approach eliminates the need for detailed damage assessments and claims adjustments, resulting in faster payouts and reduced administrative burden.
The legislation introduces a precise definition of parametric insurance and establishes its inclusion in the list of insurance types that can be sold by retail agents and brokers, as well as excess-line brokers. The bill also requires insurers to provide certain disclosures to consumers, including that parametric insurance is not a substitute for traditional property or flood insurance.
Key benefits of the legislation include:
– Faster Payouts: Parametric insurance eliminates the need for detailed damage assessments and claims adjustments.
– Consumer Protection: Insurers must provide disclosures to consumers, highlighting the limitations of parametric insurance.
– Increased Transparency: The bill ensures that parametric policies are subject to the same cancellation and non-renewal rules as traditional personal-lines policies.
The passage of this bill has been hailed as a pioneering step in modernizing New York’s insurance regulations, with the Insurance Association of New York (PIANY) strongly supporting the legislation.
