New York Gov. David Paterson says the state is seriously considering resurrection of the long-defunct New York Insurance Exchange. Created in 1980, the Exchange closed in 1987. It was a syndicated, subscription-based market modeled after Lloyd’s of London, to write both specialized risks as well as reinsurance.

“We have private equity funds and hedge funds and other investment funds that might be eager to place their capital in the insurance business right here in New York,” he said. “An exchange would provide such an opportunity. This would be complementary to what Lloyd’s does on its side of the ocean.” Patterson added he supports a move to “level the playing field” when it comes to allowing foreign reinsurance entities, such as Lloyd’s, to do business in his state without imposing unnecessary collateral burdens not required of domestic carriers. He said the state would “seriously consider moving to principles-based regulation, focusing on the outcome, to make oversight more efficient and effective.”

What It Means to Agents: Gov. Paterson made the remarks at a dinner in New York hosted by Lloyd’s. While Gov. Paterson may view New York re-opening an exchange as being “complimentary” to Lloyd’s, the fact remains that 40 percent of Lloyd’s business is done with the United States. Lloyd’s might not want to be restrained to doing business “on its side of the ocean” by the opening of another exchange.

N.Y. Governor Says Exchange May Be Resurrected (National Underwriter 6/25/08)

July 2, 2008