The New York Department of Financial Services superintendent feels that it would simplify the process.
According to the financial regulator in New York state, homeowners insurance needs to become more standardized because its current form is confusing customers regarding what protection they have through their policies.
According to Benjamin Lawsky, very few property owners actually fully understand the coverage they have.
Lawsky, the Department of Financial Services superintendent in New York, explained that by boosting uniformity, it would help consumers to be able to compare home insurance companies and products. He added that he believes that the same thing could be done for home coverage as what is currently being accomplished for health plans.
Lawsky feels that homeowners insurance policies should move in the same direction that healthcare has taken.
He remarked that “There’s room for greater standardization,” and that “We’re doing it for health insurance and we need to ask, ‘Why not move in the same direction for homeowners’ policies?’” Lawsky stated that his inspiration to push to make homeowners insurance policies simpler was inspired by President Barack Obama’s overhaul of the healthcare system and its coverage level standardization.
He also said that Superstorm Sandy provided a great deal of proof regarding the scale of the problem and the breadth of the misunderstanding of homeowners insurance policies. For example, in that case, one of the most widespread and devastating misunderstandings was that people thought their standard coverage protected them against flood damage, which was a considerable source of the losses from that storm nearly a year ago.
Assistant vice president of research at Independent Insurance Agents & Brokers of New York, Tim Dodge, said that “For the average consumer, the contracts are difficult to read,” going on to speak about homeowners insurance coverage by saying that “You probably could simplify some of the language without changing the intent. The trick is to find that right balance.”
In July, alone, Lawsky’s office had received over 3,700 complaints from business and homeowners insurance policyholders regarding the damage left behind by Sandy. Since the storm itself, the office has received more than 400,000 complaints.