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Jun 25
DFS: No More Underwriting of Subsidized Housing

Insurers in New York are no longer permitted to take adverse underwriting actions regarding habitational properties that contain subsidized housing units, according to the state Department of Financial Services (DFS.) The department said it was acting in response to a new section of the state's insurance law that took effect this spring.

The announcement came in a circular letter dated June 24, 2024 addressed to all New York licensed property-casualty insurers; licensed insurance producers; the New York Property Insurance Underwriting Association (NYPIUA); and the Excess Line Association of New York (ELANY.) Bernard Ganley, deputy superintendent of the department's Property Bureau, explained that the state budget enacted on April 20 included a new Section 3462 of the Insurance Law. That law prohibits insurers from taking certain underwriting actions regarding residential buildings.

Insurers are restricted from acting based on any of the following:

  • The building has dwelling units mandated by law or regulations to be affordable to residents at specific income levels;
  • The building owner, tenants, or shareholders of a cooperative housing corporation receive government rental assistance such as Section 8 housing vouchers;
  • The tenants' or shareholders' level or sources of income; or
  • Whether certain types of entities designated in the state Private Housing Finance Law own the building.

In these circumstances, insurers cannot:

  • Ask about these factors on insurance applications;
  • Cancel
  • Non-renew;
  • Refuse to issue;
  • Charge a higher premium; or
  • Exclude, limit, restrict, or reduce coverage.

The letter reminded insurers, producers, and the two associations that they may no longer request information about government-subsidized housing units or tenants' rental assistance. They may not use this information for underwriting purposes, including determining eligibility or to determine if further underwriting is necessary. Insurers who have approved rates that apply rating factors for the presence of these circumstances are required to file revised rates. Updated applications and underwriting guidelines will also be required. It is likely that industry standards-setting organization ACORD ​will have to revise its form ACORD 105 (2012/06), Apartment Building Supplement, which asks about the presence of subsidized housing.

Section 3462 took effect immediately when Gov. Kathy Hochul signed the budget bills into law on April 20. We urge all Big I New York members to change their procedures now to comply with the new law and the circular letter.


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