N.Y. Insurance Agency Probes Possible Discrimination in Rates

With Jewish groups complaining of staggering insurance hikes since last year’s terrorist attacks, the New York State Insurance Department is investigating the possibility of discriminatory behavior.

New York is trying to discern whether the increased rates are “specifically against Jewish groups or just part of larger trends,” said Gregory Serio, the department’s superintendent.

Those larger trends reflect a contraction in the market since Sept. 11, 2001. The insurance industry has suffered a $50 billion loss since then, second only to the $20 billion incurred after Hurricane Andrew in 1992, according to Serio.

Providers have passed those costs to their clients, along with cutting back on the terror coverage they once provided.

For Jewish organizations, that has translated into increases as high as 100 percent.

In some cases, federations and other Jewish groups have had to make up the costs by diverting critical funds from programs and staffing.

New York’s investigation comes as the United Jewish Communities, the umbrella group of North American federations, has been collecting data from its member federations on their experiences with costly insurance.

“The general assessment we’re making is we have a crisis in insurance coverage,” said Diana Aviv, UJC’s vice president of public policy.

“Choices are having to be made between program activities and paying the cost,” she said, citing several examples around the country, including a Jewish community center in Miami that had to cut its programs for the elderly and for children to make its payments.

But neither Jewish leaders nor Serio himself know whether Jewish organizations are being singled out.

“I have no evidence to date” that Jewish groups are being targeted, said Ronald Soloway, managing director of government relations for UJA-Federation of New York.

“What I do know is the cost has gone up extraordinarily for all our Jewish agencies,” which have had to move money from services to pay the insurance, he said.

“I can assure you” the insurance issue is a “pressing concern,” said Soloway, who estimated that his federation’s rates have climbed 100 percent.

As for discrimination, Soloway said that he’s “waiting to see the results of what our state commissioner finds.”

He noted that he knows of a non-Jewish agency whose property insurance rates quintupled.

So far, the New York State Insurance Department has received anecdotal evidence that “may indicate there is discrimination of sorts going on,” said Joanna Rose, department spokeswoman.

“We are still looking into it,” Rose said. She declined to say what action would be taken should such behavior be confirmed.

For its part, UJC recently urged the directors of state government affairs from around the country to find out from their state insurance commissioners whether Jewish organizations are being treated differently.

So far, said Aviv, they are finding that “is not the case.”

If in fact there is a finding that Jewish organizations are being targeted, she said, there will be a “whole different strategy.”

As part of a series of meetings with state government officials, the UJA-Federation of New York invited Serio to address the issue at a meeting earlier this month at its New York headquarters.

At the meeting, Serio told the group he expects the insurance troubles to last through 2004 due to the beating the insurance industry took from Sept. 11, along with the dips in the stock market and economy.

But he offered his offices to intervene when appropriate.

Serio also distributed questionnaires for Jewish groups to detail their experiences as part of the department’s investigations.

New York is actually conducting several market conduct investigations into “redlining,” or refusing to cover, businesses in lower Manhattan or illegal treatment of large New York businesses.

And the New York State Insurance Department has been lobbying members of Congress to pass a bill in the House of Representatives known as the terrorism backstop bill.

That bill would require the government to assume 90 percent of losses between $1 billion and $100 billion due to a terror attack.

But Aviv said the proposed legislation, which she called a “valuable step,” does not go far enough.

“It doesn’t address the fundamental problem — massive price increases and the inability to get terrorism coverage,” she said Instead, she said, it is intended to provide financial assurance to insurance companies that have no way of calculating future terrorism costs.

Meanwhile, Jewish leaders seem pleased with New York’s attention to the matter.

Abraham Foxman, national director of the Anti-Defamation League, said that after this month’s meeting, “I walk away knowing that we’re not alone. Instead of having to fend alone, we have them as allies.”