State takes aim at subsidized housing insurance discrimination

Property and liability insurance costs for affordable housing — meaning governmentsupported properties serving low- and moderate-income New Yorkers — has skyrocketed in recent years. This is due to some legitimate factors, such as higher replacement prices driven by rising real estate values, construction and labor costs. But it’s also due to a shrinking marketplace: Fewer and fewer companies are willing to write insurance for affordable housing properties. Those companies that remain are charging higher and higher premiums, raising deductibles and insisting on more exclusions.

So there was a collective cheer from New York’s affordable-housing community when Gov. Kathy Hochul announced, in her State of the State address, measures to crack down on subsidized housing discrimination by insurance companies. After years of property owners sounding the alarm, and more than a year after the state Department of Financial Services released a report on the problems of insurance for affordable housing, finally action is on the table. And moving forward is imperative: Affordable-housing owners cannot sustain the status quo.

In deciding whether to offer or renew policies, insurance companies have been asking property owners and their brokers whether the buildings in question participate in affordable or subsidized housing programs, rely on government loans or have tenants with rental assistance vouchers. Many companies say outright that they do not write policies for this kind of housing.

The governor’s new proposal would make such inquiries, as well as factoring in the presence of affordable housing into pricing, illegal. This is long overdue. Government subsidies and the residents who benefit from them do not make a building financially riskier. In fact, affordablehousing properties have many levels of government and investor oversight, are subject to inspections, are built to rigid green standards and often contain support services. All of that minimizes financial risk.

The governor’s proposed

legislation makes clear that these are not legitimate business practices and would preclude them.

But to be successful, laws need enforcement. The Department of Financial Services must be empowered to enforce the new law with appropriate and clear penalties for noncompliance. And DFS will need to be vigilant against proxy discrimination — for example, insurance companies asking which recreational activities are enjoyed by residents, basketball or ice hockey, a tactic we have heard is beginning to occur.

The governor’s proposal should also cover all types of insurance products, including liability, because the issues are not limited to property insurance, and must apply to both admitted and non-admitted companies that operate in New York.

To be clear, new laws are not the only strategies needed to address the pressures created by exorbitant insurance costs in affordable housing. Further solutions, such as funding, are also necessary to bring down costs. But this proposal is a vitally important step that will remove unjustifiable cost drivers and illegitimate reasons for insurance coverage decisions. We urge that it be enacted into law this session.

Baaba Halm is vice president and New York market leader of Enterprise Community Partners.