Municipality Insurance New York Primer

July 30, 2011

Municipality insurance is meant to cover property and/or liabilities for a municipality.

Municipalities are generally responsible for a number of public services as well as roads and non-interstate highways. There have been problems with the municipality insurance New York area coverage that the city has worked hard to rectify. These problems include providers lacking information and local residents contesting eminent domain.

The ups and downs of the economic tax base and fiscal questions of professional insurance companies led some New York municipal associations to create their own insurance company.

This association began with lobbying for the passage of legislation that allowed the formation of the New York Municipal Insurance Reciprocal. This entity, founded in 1993, was created with 26 local governments participating. The last decade and a half have seen their reputation grow as a full service insurance concern that has spread across the state. The association has grown to include over one-third of the 1600 municipalities in the state.

This has allowed the company to become the biggest casualty and property underwriter in the New York state. It now tries to be, more than anything else, an insurance company for local governments. The organization is locally run so that it can be responsive to the needs of the communities it serves.

The organization has since expanded to be a more comprehensive insurance provider. It has branched out to include group, auto, homeowners and other types of coverage. This has allowed for increased competition in the New York market. This has had the ancillary benefits of keeping the larger insurance concerns on a more competitive footing. Much in the same way that credit unions have been an alternative to banks; the Reciprocal has been a different choice for New York consumers and businesses.

In 2003, the State Board of Insurance commissioned a study into the Reciprocals activities and certain irregularities were found. There was an allegation of conflict of interest charges among other transgressions. Largely the charges were minor and the Reciprocal complied with the majority of the recommendations. The size and scope of the businesses and communities with which the Reciprocal dealt with led to the problems, and it was recommended that the organization return to the more local focus that brought it into being in the first place. This is what led the organization to focus on more community based insurance services mentioned above.

The municipality insurance New York market has benefited greatly from the addition of the Reciprocal. The added competition in the huge world of New York insurers has enabled the market to remain fairly stable. Although sometimes saddled with the difficulties of covering such a large number of concerns, the Reciprocal has seemed to enhance the insurance community of New York.

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