In a recent interview with National Underwriter magazine, New York Superintendent of Insurance Eric Dinallo stated that there are “major top-end brokers” interested in doing business on the potentially-resurrected New York Insurance Exchange (the “Exchange”) if it can help increase market capacity. The New York Insurance Exchange was created in 1979 in response to concern that the significant growth of the insurance industry during the mid-1970s would result in premium dollars flowing to international markets having a greater capacity to write high-risk insurance.

After a period of rapid initial growth, the Exchange faltered when market conditions changed dramatically in the late 1980s. The Exchange was ultimately liquidated in 1996. New York Insurance Law, however, still contains the authorizing statutes for the Exchange and Dinallo has mentioned the possibility of reviving it more than once during his tenure as Superintendent. InsureReinsure.com previously covered the idea of re-establishing the Exchange here.

The National Underwriter interview reports that Dinallo noted that the technology available to run the Exchange today is far superior to that which was available in the 1980s, and would offer greater transparency as to where counterparty risk would be placed. In the interview, Dinallo also noted that reinsurance would likely be the top line traded on the Exchange, followed by property-catastrophe risks, including terrorism. Dinallo even suggested the Exchange could work as a platform for dealing in credit default swap contracts. The success of the proposal to resurrect the Exchange is largely dependent on the economic demand for such a market. Given the current economic climate, it remains to be seen if this much-discussed proposal will become a reality.