For this Advisory Report, AAIS spoke with Norm Orlowski, President and CEO of Erie and Niagara Insurance Association (ENIA) and Treasurer of the New York Insurance Association (NYIA), ahead of the NYIA 2023 Annual Conference. He discussed the biggest challenges facing the U.S. market, the legislation and regulation issues ENIA is watching, and what to look forward to at this year’s Annual Conference.

Biggest Challenges Facing the U.S. Insurance Market Today

Orlowski believes the biggest issues affecting the market are unique over the last three years. “The first issue would be reinsurance availability and pricing,” he shared. “Last quarter, the market was really constricted with reinsurance availability. There were significant cost increases, which are very difficult to manage in the short term.” An extended period of inflation is also a pertinent issue according to Orlowski. “This has ramifications for your business; the cost of settling claims is higher and the costs of employment labor are higher,” he said. “You have to factor that into future loss experience, which is a challenge.” Another type of inflation called social inflation, or the cost of settling liability claims, is an additional challenge specifically affecting ENIA. “As jury awards increase, that gives the plaintiffs’ bar more incentive to put pressure on settlements so that you don't go to trial,” he explained, “and that drives up the cost of litigation.”

Legislation & Regulation Issues Erie and Niagara Insurance Association Is Watching

Since ENIA is predominantly a property writer, a lot of their policies are habitational risks. “The last three or four years, the New York State Legislature has been wrestling with eliminating the lead paint exclusion in all of our policies,” Orlowski reported. “That exclusion was put on in the mid-90s because of the cost of claim settlement on paying claims. If they do eliminate that exclusion, it will cause chaos in the habitational marketplace.” Orlowski admitted he is not sure what the cost would be and how they would have to react to rates if that exclusion was eliminated, so they’re keeping a close eye on this legislature. ENIA is also watching the legislature that looks at some of the attributes of underwriting risk management and whether or not there can be a risk-based activity in underwriting. “An example of this would be using zip code as a component of your rating,” Orlowski explained. “Again, if they eliminate the ability for us to use metrics to set rates, this could cause us to really take a look at how we write New York State.”

NYIA 2023 Annual Conference

Orlowski is excited for NYIA to come to his hometown of Buffalo, NY. “NYIA conferences are a chance to network with peers who run other companies of similar size [to ENIA] and single state in the types of products I write,” he shared. Having the New York Department of Financial Services superintendent Adrienne Harris speak also gives attendees an opportunity to learn the ins and outs of what's going on in Albany.

Registration is now open for the NYIA 2023 Annual Conference on May 31-June 2. Click here to register online.