Two niche N.Y. home insurance needs E&S lines fill
Although they hold a small market share of less than 1%, E&S lines are crucial for the state’s insurance market.
Excess & surplus (E&S) lines are vital to filling two important coverage needs in the New York home insurance market: High-value homes and dwellings near coastal waters, according to a study commissioned by the Excess Line Association of New York (ELANY).
Two factors driving these niche markets, according to the association, are underwriting concerns for higher hazard levels (primarily near coastlines) and coverage for homes that have much larger than typical insured value needs or desire for other coverages beyond those in standard home insurance policies.
Overall, E&S lines have less than 1% of the market share of New York’s home insurance sector. However, in these two niche home segments, excess lines hold a material share of the market, ELANY reported.
Regional demand drives concentration
These two niche markets are highly clustered in two regions: New York City and Long Island.
In fact, 60% of the state’s E&S homeowner policies are concentrated in Long Island’s Nassau and Suffolk counties, which are home to the bulk of New York’s coastal properties. ELANY explained the significant windstorm risk posed on Long Island is a huge barrier to obtaining a policy on the admitted market. A further 25% of the E&S market covering home policies is spread across New York City’s five boroughs, while Westchester county accounts for around 9%.
Breaking down Long Island further, around 93% of owner-occupied homes are in the immediately coastal area (1,000 feet from the shore) and covered by the E&S market, according to the association. For homes within one mile of the coast, excess lines’ market share is around 10%-15%. Once past the one-mile mark, the E&S market share drops to less than half of 1%.
ELANY noted the clear difference between niche markets and the overall home insurance space makes it critical to evaluate each separately. It suggests looking at the state’s home insurance market as being comprised of three sectors: The core market, which accounts for around 82% of all homes; the market for high-value homes not located near the coast; and a sector devoted to oceanfront properties, regardless of value. For comparisons, ELANY defined the core market as those homes that are valued at less than $500,000 and are at least 1,000 feet from the coastline.
Related: