In a significant development for New York state’s insurance industry, Adirondack Insurance Exchange has announced its decision to exit the state’s insurance marketplace. This move comes as AIE faces ongoing financial difficulties and a deteriorating capital position.
Reasons behind the departure
In an announcement by AIE, the carrier has been struggling with challenging market conditions, including a rapid rise in loss costs and an alleged unmet need for further rate increases. These factors have strained the company’s capital reserves, ultimately leading to the decision to withdraw from the New York state market.
Immediate implications for policyholders
As AIE begins its transition out of the New York market, policyholders with existing Adirondack policies will need to secure new insurance coverage. Policyholders in New York are afforded with certain statutorily required run-off periods. PIA Northeast members can learn more about run-off periods here.
However, many mortgage lenders require homeowners insurance from carriers with a stable financial rating, which AIE can no longer provide. Consequently, agents may have to act prior to the expiration of the run-off period to find alternative insurance providers for their clients so they can maintain compliance with their mortgage agreements and ensure continuous coverage.
Impact of mountain valley indemnity company
Insurance agents who represent Adirondack Insurance Exchange and Mountain Valley Indemnity Co., face additional challenges. Although MVIC’s financial stability rating remains intact, the reinsurance agreement between AIE and MVIC expired July 1, 2024, and AIE’s overall financial instability could affect MVIC in the future. Agents are advised to transition existing Adirondack and Mountain Valley policies to other carriers immediately to mitigate potential risks.
Collaboration with the DFS
To address the financial challenges and ensure the protection of existing customers, Adirondack Insurance Exchange is working closely with the New York State Department of Financial Services.
Next steps for affected policyholders
For policyholders who are impacted by Adirondack’s exit, it is crucial to consult with their insurance agents as soon as possible.
Agents can assist in exploring alternative insurance providers that meet lender requirements, ensuring a smooth transition and continuous coverage.
PIA Northeast has prepared resources, including a sample letter, to help agents communicate these changes to their clients effectively.
Members can access the letters with the links below:
For more resources and guidance on how to handle these changes, agents and brokers can visit PIA’s Market Transition Tool Kit.
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.
