Maloney on reversing cost trends and catastrophic liability

And so how will limiting participation to that kind of subset of owners impact the overall risk pool?

So that's why we're picking that sort of middle selection, because we're not taking on any extra risk.

What we're doing is we're offering this lower cost because we're not having the overhead and the profit and the cost of capital that the insurance companies have.

So it's not about taking on more risk or liability.

It's just about doing it more efficiently because the city doesn't have the same situation as these private insurers.

The report, and you mentioned this before, how we hope that this is going to reverse cost trends and then ultimately subsidize the insurance program.

I'm just wondering if you could speak a little bit more to how this will reverse cost trends.

So we're hoping that this sort of sets a standard and becomes competitive.

But what we're really hoping is that it's going to be able to leverage other investors to be part of this insurance solution.

And also, we expect that it's going to help reduce the subsidy needed to bring on HPD housing, which will allow us to bring more housing.

So, for example, about 500 and 700 million savings brings about an additional 2,000 units of affordable housing.

So in the case that there were something like a Hurricane Sandy, which caused billions of dollars in damage, would the city be liable for claims relating to those types of damages?

Or if it's any damage related to the distress of the building, just to understand the operations?

Yeah, thank you for that.

That's an important question.

We are going to look for the reinsurance market.

This is typically what insurer providers do.

They reinsure sort of certain...

Like certain risks.

And so we're going to tap into the reinsurance market for those like catastrophic sort of, we haven't made the decision exactly, but that's an option for us for that very reason.

The question comes at trying to secure the city from potentially, as you said, having higher risk for a budget deficit down the line if an event were to happen in the city's life.

Exactly, and that's where the reinsurance market, I think, can be really effective, and so we're going to be looking into that.

That's part of the whole plan for the insurance program.

My last question on the insurance is the executive plan includes $20 million in FY27 and then $40 million following.

Does that include the costs for staffing and operating the programs?

Yes, we're going to have a third-party operator, so there'll be...

A minimal cost to, for that operator.

Yeah, so that'll be included in the $100 million.

And would that operator be responsible for conducting inspections or determining risk at each of the sites?

sites that were?

Yeah, there's going to be an actuary who's going to help us sort of assess the risk, so that has been procured.

And then we'll have to work out the actual agreement.

But it's not like the city or EDC is going to be assessing the risks for these housing.

It's going to be experts.

Great, thank you.