As we previously reported here and here, the New York State Insurance Department (“NYSID”) has announced its intention since July 2008 to revive the currently defunct New York Insurance Exchange (the “Exchange”). On January 6, 2010 in New York Governor David Paterson’s State of the State speech, Governor Patterson said that reviving the Exchange is one of the essential elements in his plan to rebuild New York’s economy and that “[b]y bringing together buyers and sellers of complex commercial insurance, the exchange will reaffirm [New York’s] status as the hub of international trade and finance and it will also curtail the unregulated transactions that devastated the global economy.”
According to news reports, NYSID Superintendent James Wrynn stated that he expects to have a working committee formed within the next two weeks and that revival of the exchange is “something [the NYSID is] working on daily.” The NYSID hopes to have the Exchange reestablished as soon as possible. It is anticipated that the Exchange would operate like Lloyd’s of London for complicated, large or risky insurance contracts.
The Exchange was originally 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.