In PIANY’s recent overview of Gov. Kathy Hochul’s Transportation, Economic Development and Environmental Conservation budget proposals, we outlined several insurance-related measures that could affect the personal lines marketplace in New York state significantly.
Now, we’re continuing our deeper dive. This is the second in a series examining each proposal individually—what it does, why it matters and what’s at stake.
And, as we noted previously, this moment is historic. It has been decades since a New York state governor has included substantive insurance reforms in the Executive Budget. That makes this session significant. It also makes careful analysis essential.
This time, we turn to Part CC—a proposal that would establish a mandatory benchmark loss ratio for certain homeowners insurers.
What it would do
Part CC would create a statutory benchmark loss ratio for homeowners insurance.
Specifically, insurers with at least $10 million in average annual gross written homeowners insurance premiums would be required to refile their rates for prior approval if their actual loss ratios fall below a benchmark established by the New York State Department of Financial Services.
In simple terms, if an insurer’s claims payments over a specified period do not meet a state-determined percentage of premium, the insurer could be compelled to revisit and potentially lower its rates.
At first glance, this may appear to be a consumer-protection measure. However, applying a benchmark loss ratio mechanism to homeowners insurance would be unprecedented and untested.
While loss ratio standards are common in health insurance and certain public programs, homeowners insurance operates differently.
What is a loss ratio—and what isn’t it?
A loss ratio measures the percentage of premium dollars paid out in claims. If an insurer collects $100 in premium and pays $60 in claims, its loss ratio is 60%.
However, a loss ratio does not account for administrative expenses, reinsurance costs, taxes and assessments, catastrophe reserving or investment income. Nor does it reflect the volatility inherent in property insurance.
Homeowners coverage is highly sensitive to catastrophes. As insurance producers know, loss experience can swing dramatically from year to year based on severe weather, inflation in construction costs, supply-chain disruptions and reinsurance pricing. A two-year historical snapshot may not reflect long-term risk exposure or financial sustainability.
By creating a statutory trigger tied solely to historical loss ratios, Part CC would introduce rigid constraints into a market that depends on actuarial flexibility and forward-looking risk modeling.
Why it matters
As agents and brokers, you already are seeing the strain in New York state’s homeowners market.
Carriers are managing increased catastrophe losses, higher reinsurance costs, rising construction expenses and continued regulatory pressure.
Part CC would add a new layer of regulatory uncertainty by tying mandatory rate refiling to a state-established benchmark loss ratio. While intended as a consumer-protection measure, this type of mechanism is untested in homeowners insurance, and it could influence how carriers evaluate their long-term participation in the state.
If insurers perceive additional regulatory risk, the response is predictable, and would include the following:
- reduced underwriting appetite;
- greater selectivity in risk acceptance;
- more nonrenewals in certain regions; and
- potential market withdrawals.
Ultimately, fewer carriers competing in the standard market would limit the options you can offer your clients. And when options shrink, affordability challenges often grow.
The impact on producers and local agencies
Beyond market availability, there also is a direct business impact for agencies. When carriers face revenue or pricing constraints, they look for ways to offset that pressure. Historically, that can include:
- adjusting or reducing commission structures;
- modifying contingency or supplemental compensation programs;
- tightening underwriting guidelines, limiting new business growth; and
- pulling back on certain products or territories.
For an independent agency, commission revenue supports staff, technology investments, compliance costs and client service operations.
At the same time, you are spending more time than ever remarketing accounts, explaining underwriting decisions and helping clients navigate limited options. A combination of compressed compensation and reduced carrier appetite creates operational strain at the agency level.
Independent agents are the stabilizing force in challenging markets. Policies that unintentionally weaken the distribution system risk diminishing the personalized guidance and advocacy upon which homeowners rely.
A strong homeowners market depends not only on carrier stability, but also on a healthy, sustainable independent agency system.
What happens if it passes
Because Part CC is included in the Executive Budget, negotiations will unfold between now and Wednesday, April 1, 2026.
If enacted, this proposal would represent a fundamental shift in how homeowners insurance is regulated in New York state.
The introduction of an untested benchmark mechanism could create regulatory uncertainty at a time when stability is critical. Carriers may reassess their long-term strategy in the state; underwriting could tighten; and availability could narrow.
Once market contraction begins, rebuilding capacity is far more difficult than preserving it.
This is not simply a technical rate-filing issue. It is a market-structure issue.
Moments like this shape the trajectory of the homeowners insurance marketplace for years—if not decades.
A better path forward
If the state legislature’s objective is to evaluate insurer profitability in the homeowners market, there is a more balanced solution.
PIANY recommends reauthorizing New York Insurance Law § 2323.
Section 2323 empowered DFS to monitor and report on insurer profitability in the homeowners market. Reauthorizing this provision would allow for transparent, data-driven oversight of overall market trends—without imposing rigid statutory triggers tied to a single metric.
This approach preserves regulatory authority while maintaining market flexibility. It allows policymakers to assess comprehensive profitability data and determine whether future action is necessary—without risking unintended market disruption today.
Consumer protection and market stability are not mutually exclusive. Thoughtful oversight can—and should—achieve both.
What you can do
Between now and April 1, PIANY members can make a meaningful difference.
No. 1: Participate in PIANY’s District Office Visit Program.
Direct conversations with legislators and staff are among the most effective advocacy tools available. Explaining how market instability affects availability, underwriting and client options brings this issue into real-world focus.
No. 2: Respond to grassroots alerts.
When action alerts are issued, take five minutes to respond. Personalized outreach from local agents carries weight—especially during final budget negotiations.
No. 3: Share your experience.
If you have seen reduced carrier appetite, tighter underwriting or clients struggling to find coverage, share those examples with PIANY. Real-world stories strengthen our advocacy and underscore the practical implications of policy decisions.
New York TED 2026 series
N.Y.: Have you met TED (again)?
N.Y.: Part BB: A once-in-a-generation opportunity to improve premium transparency
N.Y.: Part CC: Protecting market stability—why Part CC misses the mark
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.
