New York – MWBE’s and State Guaranty Fund

FYI – AIA’s Gary Henning reports that Governor Cuomo has stated that he wants the state to hit its target of using MWBEs for 20% of the contracts that the state lets out. He also said that a major reason the state was not hitting this target is because many MWBEs have trouble getting bonded. Therefore, Governor Cuomo is proposing that the state set up some sort guaranty fund for the backing of bonds purchased by MWBEs. The details of this proposal will come out with the release of the Executive Budget in a couple of weeks.

You may recall that a similar issue arose during the Spitzer Administration about 4-5 years ago. At that time the proposal was to assess all commercial lines carriers to develop a pool of money for the State Fund to bond contractors that could not get bonds. Through the hard work of the SFAA and AIA this proposal instead resulted in the development of the SFAA’s New York Bonding Initiative. Governor Spitzer and the Insurance Department all recognized how successful this program was. In fact, at a recent meeting with the Department of Financial Services (Dec. 7th, 2011) the Department noted that they thought the bonding program in New York was working very well. So, it is important to note that this proposal to create a guaranty fund is not a done deal and that the SFAA and AIA will continue to work with the Governor’s office and Department of Financial Services to achieve a favorable outcome for all involved.

We will keep you posted of any new information, but in the meantime please let us know if you have any questions.


Angela Gleason
Associate Counsel
American Insurance Association

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