Long Island Financial Briefs: October 19, 2007

State insurance superintendent gets an education

Homeowner insurance is a hot topic on Long Island.

Major Island insurers have been slowly pulling out of the marketplace, fearing a major disaster - natural or manmade - that could drive them out of business, considering the sheer volume

These homeowners are finding it difficult to get insurance once their home has been dropped, and even if they find a company willing to issue a policy, it usually comes at a hefty price.

To address the issue, the state's Senate Insurance Committee held a recent hearing at Suffolk County Community College in Brentwood, drawing New York State Insurance Department Superintendent Eric Dinallo, members of the Independent Insurance Agents and Brokers of New York, state senators and various insurance companies.

Dinallo stunned listeners by proclaiming the coastal insurance issue is not a crisis. State Sen. Owen Johnson said he's heard a different story from independent agents and concerned citizens. "It's not a crisis," Johnson noted, "unless you're involved."

Dinallo cited a potential plan: put part of a homeowner's premium into a special catastrophe fund. This plan is supported by Allstate, although companies would see a decrease in their bottom line - where those premium payments usually go - and there is no guarantee that, if there is no catastrophe, those funds would be tax deductible.

"The thing about the pool is, companies aren't buying it," Johnson said.

What companies are doing is "nonrenewing" policies across Long Island - perfectly legal, if they stay within the state's 4 percent non-renewal cap.

State Sen. Kenneth Lavalle said the state limit isn't stringent enough, and faulted a system that allows higher regional non-renewal percentages. In the eight downstate counties - Nassau, Suffolk, Westchester and the five boroughs of New York City - up to 12 percent of policies have been dropped.

"No one from Westchester County [north] has this problem," Lavalle said. "So if they drop 12 percent here, and all the other regions are zero percent, they can still be in that 4 percent state cap."

Lavalle proposed a 4 percent policy dropping cap per region - drastically reducing the number of homeowners a company could drop on Long Island per year.

Allstate representatives attended the hearing and said that although the company has been pulling out of the eight downstate counties, it's committed to maintaining its leading presence in the area.

No decisions were made at the meeting and no date was set for another hearing, but attendees saw at least one positive outcome: Dinallo now knows that Long Islanders, insurance companies and insurance agents see coastal insurance as a front-burner issue.

Bethpage goes to Washington

Bethpage Federal Credit Union organized a recent trip to Washington for 19 Long Island not-for-profit leaders.

The trip - co-sponsored by KeySpan and the Long Island Association - was meant to help the not-for-profits form relationships with leaders in Washington and teach the organizations how these leaders can assist them.

Participants met with Congressman Steve Israel, who led a White House tour and a group discussion on how organizations can strengthen government relations.

The not-for-profit leaders also joined a roundtable discussion with the Long Island congressional delegation.

The excursion was the brainchild of Linda Armyn, vice president of corporate development and government affairs at Bethpage, and Tracie Holmberg, deputy chief of staff at Israel's Long Island office.

Commerce starts branch construction

Canada-based Toronto-Dominion Bank's takeover of Commerce Bank doesn't seem to have affected Commerce's Long Island expansion plans.

Cherry Hill, N.J.-based Commerce broke ground Oct. 4 at its new Lake Grove location, just two days after the announced sale to TD Bank. The branch will mark Commerce's 11th in Suffolk since 2002.

Credit: Laura Theis