(Dewitt, New York, Feb. 10, 2016) - A budget proposal could harm New York businesses, an insurance producers' trade group warned today. The Independent Insurance Agents & Brokers of New York (IIABNY) urged state lawmakers to reject the measure.
 
"This proposal will hurt New York small business owners," said IIABNY Chair of the Board Todd Rockefeller. "They will lose the freedom to choose their own insurance providers. It will leave contractors uninsured for some risks. It would reward contractors who operate unsafely. It should be rejected." 
 
Gov. Andrew Cuomo's proposed budget would change a long-standing state policy. It would expand the ability of certain governmental entities and the New York City government to use owner-controlled insurance programs, also known as "wrap-ups," for construction of bridges, tunnels and bus facilities. In a wrap-up, the project's owner selects and purchases the insurance for participants in the project. Rather than choosing insurance programs tailored to their own needs, the contractors must accept a program that protects the owner's interests.
 
Wrap-ups may leave contractors uninsured for some serious risks. For example, a bridge could collapse 10 years after its completion. Those who are injured may sue all of the contractors who built it. Wrap-ups often provide liability coverage to contractors for only two to five years after completion. After that, the contractors will have to pay for their legal defense and judgments on their own. 
 
Wrap-ups also may: 

• Leave contractors uninsured for auto accidents on job sites 
• Force contractors to absorb deductibles larger than they would like 
• Leave contractors unprotected if the insurer cancels the wrap-up program during the project

"New York banned wrap-ups on public construction projects for good reasons," Rockefeller said. "In the past, unscrupulous public officials used these programs to steer business toward their friends and campaign contributors. At a time when the public perceives widespread corruption in state government, this is exactly the wrong step to take."

Rockefeller also noted that wrap-ups ignore the good safety records of some contractors. Ordinarily, these contractors pay lower insurance premiums. This gives them a competitive advantage. That advantage vanishes when they cannot factor their lower insurance costs into their bids.

The Independent Insurance Agents & Brokers of New York, Inc. has represented the common business interests of independent insurance professionals since 1882. More than 1,750 agencies and their 13,000 plus employees currently rely on the DeWitt, New York-based not-for-profit trade association for legislative advocacy, continuing education and other means of industry support. In addition, most IIABNY members proudly identify themselves as Trusted Choice® agents and brokers, a national consumer brand uniting more than 21,000 independent agencies across the United States.
 
For more information, go to www.trustedchoice.com or www.iiabny.org.