In recent years, Adirondack Insurance Exchange has grappled with challenging market conditions and increasing claims payment costs—leading to a decline in its financial strength.
This situation now has culminated in Demotech’s—a financial analysis and rating company that evaluates the stability and financial strength of insurance companies—decision to withdraw its financial stability rating for Adirondack.
Rating withdrawal and potential impact
The withdrawal of the financial stability rating is a significant development—especially for policyholders with mortgages. Many lenders mandate that homeowners insurance must be provided by an insurer with a minimum financial stability rating. As a result, policyholders may be required to switch to a different insurance provider to comply with their mortgage agreements.
Guidance for affected policyholders
If you have clients who are affected by this change, their mortgage lender likely will notify them directly. PIA Northeast also encourages agents and brokers to reach out to their affected clients. PIA Northeast has created a sample letter PIA member agents can send to their clients.
It is crucial for affected policyholders to act promptly and consult with their insurance agents. Agents can help explore alternative insurance providers that meet lender requirements, ensuring continuous coverage and adherence to mortgage terms. This makes early contact with your impacted clients imperative.
Ongoing collaboration with DFS
In response to these financial challenges, Adirondack Insurance Exchange is working closely with the New York State Department of Financial Services to develop a sustainability plan that would protect existing customers.
Currently, there are no changes to coverage, and the company remains committed to providing the same level of service and protection.
Let PIA help
For more resources on the carrier actions and the proactive steps agents can take to protect themselves and their clients, click here.
Bradford J. Lachut, Esq.
Bradford J. Lachut, Esq., joined PIA as government affairs counsel for the Government & Industry Affairs Department in 2012 and then, after a four-month leave, he returned to the association in 2018 as director of government & industry affairs responsible for all legal, government relations and insurance industry liaison programs for the five state associations. Prior to PIA, Brad worked as an attorney for Steven J. Baum PC, in Amherst, and as an associate attorney for the law office of James Morris in Buffalo. He also spent time serving as senior manager of government affairs as the Buffalo Niagara Partnership, a chamber of commerce serving the Buffalo, N.Y., region, his hometown. He received his juris doctorate from Buffalo Law School and his Bachelor of Science degree in Government and Politics from Utica College, Utica, N.Y. Brad is an active Mason and Shriner.
