Hochul tries to address insurance discrimination against low-income tenants

New York Gov. Kathy Hochul is taking steps to curb insurance discrimination against low-income tenants.

The governor’s $233 billion executive budget includes a crucial measure aimed at preventing insurers from denying coverage to buildings based on tenants’ sources of income, Gothamist reported. 

Under the proposed rules, insurance companies would be prohibited from inquiring about tenants’ income levels and whether a building contains income-restricted apartments. 

The move is expected to foster a fairer insurance market, ultimately reducing costs for both tenants and property owners, while also facilitating the construction and preservation of more affordable housing units.

The changes stem from a Gothamist investigation seven months ago, which revealed that numerous insurance companies operating in New York routinely asked building owners about renting to tenants with housing subsidies, such as the federal Section 8 program, and subsequently refused coverage. Property owners were compelled to seek insurance through unregulated markets, often at significantly higher costs. The financial burden was then transferred to tenants through increased rents, impacting not only their wallets but also the maintenance of rent-stabilized apartments.

A 2022 report by New York’s Department of Financial Services and Division of Homes and Community Renewal highlighted a 43 percent average increase in insurance premiums for affordable housing owners between 2019 and 2021. Various factors, including climate-related incidents, unique New York regulations, and routine rejections based on tenant characteristics, were identified as contributors to this spike.

This discriminatory insurance practice has been colloquially termed “insurance redlining.” Despite existing state and city laws prohibiting housing discrimination based on income sources, Governor Hochul’s proposal aims to address the specific issue of insurers refusing coverage based on tenant characteristics.

Assemblymember Linda Rosenthal, who chairs the housing committee, introduced legislation immediately after Gothamist’s investigation to ban source of income discrimination by insurers. She welcomes the governor’s support, emphasizing the unacceptability of insurance companies refusing coverage for buildings with Section 8 tenants.

State Sen. Jamaal Bailey, sponsoring similar legislation, sees insurance premiums as a significant factor in increasing rents. The proposed ban has garnered support from industry experts and lawmakers, with Susan Camerata, CFO of Wavecrest, expressing optimism that it marks a positive shift in how the insurance industry approaches policy formulation.

With 682 certified insurance carriers in New York, the proposal addresses a critical issue affecting buildings with low-income tenants or those utilizing housing vouchers. Overall, Governor Hochul’s initiative aims to promote fairness, reduce costs, and contribute to the creation and preservation of affordable housing in the state.

— Ted Glanzer