[This post has been updated to include a link to a form letter for agents to use.}
Adirondack Insurance Exchange (AIE) and Mountain Valley Indemnity Co. (Mountain Valley) will withdraw from the New York personal insurance markets by the end of this year under a plan approved by state insurance regulators. The plan will permit an orderly wind down of the carriers' operations.
Under the plan's terms, the two carriers will begin non-renewing homeowners, watercraft, umbrella liability, identity theft, and auto insurance policies as they expire. Any policies that are up for renewal in 2025 will be cancelled effective December 31, 2024. While it is believed that the carriers have sufficient reserves to pay their policyholders' claims, an Allstate company has agreed to provide AIE and Mountain Valley with a line of credit to pay for claims that may exceed their reserves.
The carriers have agreed to notify policyholders and agents of the plan. Policyholders will be notified of the non-renewals and cancellations and advised to find alternate coverage as soon as possible. They will also receive monthly communications through the end of the year.
Here are answers to questions some Big I New York members may have:
Do my clients have insurance right now?
Yes. Until the effective date set forth in their non-renewal or cancellation notices, their policies remain in force.
Do AIE and Mountain Valley have to send legal cancellation and non-renewal notices?
Yes. Section 3425 of the New York Insurance Law requires them to do that.
How much notice will policyholders receive?
Section 3425 requires an insurer to provide 45 to 60 days' advance notice of non-renewal. However, the minimum amount of advance notice required for a cancellation varies by line of insurance. AIE and Mountain Valley have committed to providing at least 60 days' notice of cancellation for all lines.
Non-auto personal lines policies have a three-year required policy period. How can AIE and Mountain Valley cancel and non-renew them?
A carrier that surrenders its licenses pursuant to an approved plan under Insurance Law Section 1105 (titled "Voluntarily ceasing to maintain license") and New York Insurance Regulation 109 (titled "Requirements Of Or Plan Of Authorized Insurer Proposing To Cease To Maintain Or Change Its Existing Licensing Status In This State") may cancel and non-renew outstanding policies during the required policy period. In addition, Section 3425(c) permits a carrier to cancel policies during the three-year period pursuant to a program approved by regulators as necessary because a continuation of the present premium volume would be hazardous to the interests of policyholders of the carrier, its creditors, or the public.
Will my clients have the option of keeping their coverage with AIE or Mountain Valley?
No. All policies that have not been replaced or non-renewed will be cancelled effective December 31.
Will my clients have to pay higher premiums for replacement policies?
Unfortunately, that seems likely.
If my clients voluntarily replace their AIE or Mountain Valley policies before they expire, will they have to pay short rate penalties?
No. The New York special provisions endorsements that both carriers attach to their policies explicitly state that cancellations will be on a pro rata basis.
Will my clients have to get claims and unearned premium refunds covered by the New York Property Casualty Insurance Security Fund (also known as the “guaranty fund")?
No. It is believed that their remaining assets combined with the Allstate line of credit will make that unnecessary. That will be necessary only if the carriers are unable to meet all of their obligations with the funds they have available. In that unlikely case, policyholders' claims would still be paid.
Will the carriers be liquidated?
There is no plan to liquidate the companies at this time. The Department is monitoring the wind down process to protect policy holders.
What are the carriers doing in other states where they wrote business?
They are already winding down their books in all other states they were writing in, including a recently approved withdrawal plan in Texas.
What should I tell my clients who have AIE or Mountain Valley policies?
Big I New York has created a form letter for you to send your clients as you see fit.
[Download the letter]
The key thing to tell clients is that their insurance with these two carriers will be going away and they should prepare to make a change as soon as possible.
What has Big I New York been doing to help agencies with this situation?
In addition to communications that we have published since Memorial Day, we met with DFS representatives by video on July 25 and August 1. In fact, DFS requested the August 1 meeting so they could inform us about the withdrawal plan. We have offered to assist the department with communications to the producer community as the situation develops.
In addition, we may schedule a free webinar to address members' questions. Please watch our future newsletters for announcements about this.