Insurers who issue policies covering catastrophic weather-related events should take note of New York Assembly Bill 10344. As of January 12, 2025, insurers have the ability to incorporate parametric insurance into their insurance products as a regulated area of insurance law. New York’s legislation is the most recent example of how states are recognizing parametric insurance as a reliable and valid insurance product. As climate disasters become more prevalent and increase in magnitude, policyholders may look for insurance that offers reliable payouts so as to return normalcy as quickly and efficiently as possible. Enter parametric insurance. Below is a summary of the New York legislation, why parametric insurance matters, and the different ways in which is it being used as a complement to traditional insurance products.
Key aspects of Assembly Bill 10344
Through New York Assembly Bill 10344, the New York Senate and Assembly has amended Section 1113 of the New York Insurance Law to include parametric insurance as a type of authorized insurance. “Parametric insurance” is defined as “insurance against the occurrence of a weather-related event, such as windstorm, flood, snow, wildfire, tornado, cyclone, or earthquake, where the indemnification is based on the proximity and magnitude of the event as measured and reported by a state or federal government agency.” N.Y. Ins. Law § 1113 (McKinney). It is further defined as a “basic kind of insurance” under Article 41, governing Property and Casualty Insurance Companies. N.Y. Ins. Law § 4101 (McKinney). Section 3416, entitled “Parametric Insurance,” requires an insurer, or an excess line broker if applicable, to disclose the following information in the insurance application and in a prominent writing upon policy issuance and renewal:
- the policy is not a substitute for property insurance or flood insurance, as relevant, which generally provide more comprehensive coverage in the event of a loss;
- a mortgagee or loss payee may not accept a parametric insurance policy.
N.Y. Ins. Law § 3416 (McKinney).
