Social Inflation and Victims’ Act Hit NYSIR

If ever social trends affected an entity…ratings agency AM Best downgraded NYSIR to a B “Fair”, from its longstanding A-  rating. primarily due to additional reserve strengthening as NYSIR experienced higher-than-expected losses as a result of the impact of the Child Victims Act and “social inflation” on liability claim costs, increased property loss costs, and higher-than-usual sexual assault and molestations claims, Best said.

The downgrade reflects continued deterioration in the Uniondale, New York-based reciprocal insurer’s risk-adjusted capitalization and policyholder surplus as of year-end 2023 and through the first quarter of this year, Best said.

Despite mitigation strategies put in place in recent years, NYSIR’s operating performance has ranged below the adequate range as higher loss costs led to poor results last year following a significant overall loss in 2022, the ratings agency said. Further negative action could occur if NYSIR’s balance sheet strength does not improve as a result of further surplus deterioration, unfavorable loss emergence, continued adverse development, weather-related events or a decline in its regulatory capital position, Best said.

About NYSIR:

NYSIR provides property, general liability, auto liability and physical damage, school board legal liability and excess catastrophe liability policies to school districts across 50 New York counties.