Representatives of PIANY met recently with officials from the New York State Department of Financial Services to discuss the impending exit of Adirondack Insurance Exchange and Mountain Valley Insurance Company from the New York marketplace. This meeting comes in response to growing concerns within the industry regarding the financial stability of these carriers and the impact on policyholders and agents.
Financial challenges and market exit
Both Adirondack and Mountain Valley have been grappling with financial difficulties for some time. Despite prolonged efforts by the DFS to stabilize the situation, the financial outlook for both carriers continued to deteriorate. Allstate, the parent company of these carriers, ultimately decided against injecting additional capital to support their operations.
Given these circumstances, both Adirondack and Mountain Valley requested to exit the New York insurance market. Both carriers already have completed their exits in the other states in which they do business. New York marks the final state in which these companies will wind down their operations. The DFS is working with the carriers closely to ensure that this transition occurs in an orderly manner, with the winddown expected to be completed by the end of the year.
Timeline and communication strategy
The DFS has acknowledged the significant challenges that agents and consumers will face during this process. The department emphasized the importance of keeping consumers informed and proactive during this transition.
To minimize confusion and ensure transparency, both carriers will send out monthly communications to policyholders and agents, explaining the situation and outlining the next steps for policyholders. Notices will be sent directly from the companies, with the first round of notifications targeting agents and brokers—set to be distributed today.
See the Mountain Valley notice here.
See the Adirondack Insurance Exchange notice here.
These communications will supplement, not replace, the standard statutory notices required in such scenarios typically. The DFS indicated it will be closely involved in overseeing and approving these communications to ensure they are clear and effective.
Starting in October, Adirondack and Mountain Valley will begin the nonrenewal process for their policies, which will require both carriers to follow the statutorily prescribed notice form and timeline (learn more here). Policies that remain with the carrier at the end of 2024 are expected to be terminated mid-term.
The DFS has ensured that both Adirondack and Mountain Valley have sufficient capital to pay claims through the end of the year. This will allow policyholders to avoid having to place a claim through the state guaranty fund, which can be a time-consuming process. This will ensure timely payment of claims and allow policyholders to avoid submitting a claim through the state guaranty fund.
Going forward
The DFS has requested that PIANY and its members keep the department informed of any challenges encountered when placing Adirondack policies with other carriers. This proactive approach aims to ensure that agents and brokers can transition their clients to new insurers smoothly, minimizing disruption.
As Adirondack and Mountain Valley complete their exit from the marketplace, the DFS remains committed to mitigating the impact on policyholders and supporting the industry through this transition. PIANY will continue to work with the DFS and its members closely to navigate this challenging period and ensure the best possible outcomes for all stakeholders involved.
In the meeting, PIANY was represented by PIANY President Gary Slavin, CLTC, CIC, President-elect Rich Andrews, LUTCF, and First Vice President Jason Bartow, AAI, CPIA.
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.
