Fire departments on Long Island and across New York could be owed millions by foreign insurance carriers because the state failed to enforce a law requiring companies to pay a percentage of fire service premiums, according to a lawsuit filed Wednesday.
The lawsuit, filed on behalf of the presidents of the Blue Point and Hewlett firefighters’ charities in the State Court of Claims in Albany, names the state and the Department of Financial Services as defendants. It claims the department failed to ensure insurance carriers comply with the law. It’s also asking the office of State Comptroller Thomas DiNapoli to conduct an audit to determine how much money could be owed to fire departments.
Currently, insurance companies self-report the funds, resulting in disorganized and potentially shoddy accounting practices, according to plaintiffs’ attorneys.
Lawyers for the two charities claim that the state’s 1,700 volunteer fire departments alone could be owed tens of millions of dollars annually. On Long Island, 175 fire departments would be entitled to compensation.
WHAT YOU SHOULD KNOW A lawsuit filed Wednesday on behalf of the presidents of the Blue Point and Hewlett firefighter charities alleges that foreign insurance carriers may owe millions of dollars to volunteer and paid firefighters across the state. Truckers are required by law to pay a 2% annual tax on homeowners’ insurance premiums written against loss or damage from fire and a 3% tax on certain automobile fire insurance premiums to the state, which provides funds to fire departments, fire districts, and charities and the New York State Fire Department. The lawsuit alleges that insurance carriers self-report payouts with little oversight and are asking State Comptroller Thomas DiNapoli’s office to conduct an audit of the program.
“The law is very well intentioned and should be enforced,” said Hauppauge-based attorney Edmond Chakmakian, one of the two attorneys on the case. “But having insurance companies in the honor system is like asking the fox to take stock of the chicken coop… We don’t think it’s appropriate for them to come forward on their own. And we think [the money] is not collected and distributed in accordance with the statutes.”
The Ministry of Financial Services and the Office of the State Audit Office declined to comment.
A long-standing state law, the Foreign Tax Program, requires foreign insurance carriers to pay a 2% annual tax on homeowners’ insurance premiums written against loss or damage caused by fire, and, according to the lawsuit, a 3% tax on certain auto fire insurance premiums.
Taxes are collected by the Treasury Department and paid to volunteer fire departments, fire districts, fire service charities, and the New York State Fire Service Association through a formula based in part on the number of active firefighters in a department.
The law applies to all fire departments outside of New York City and Buffalo that have separate schemes for receiving the money, commonly known as “two percent funds.” Similar laws exist across the country.
The legislation usually allows fire districts to use the money for any cause that benefits them as a whole, although experts said most are using the funds to help injured and uninsured members.
Records obtained from charities and made available to Newsday show that about 200 insurance companies provided a total of $73.4 million under the law in 2022, with $44.5 million going directly to fire districts .
The National Insurance Association of Commissioners reported that about $26 billion in insurance premiums is paid annually in the state, although it’s not clear how much of that money would need to be allocated under the law.
Samantha Segal, a Huntington-based attorney working on the lawsuit, said without accounting procedures to examine the system and verifying data, it’s impossible to know if fire departments are getting everything they owe.
“Volunteer firefighters are charged by law with fighting fires and responding to public emergencies,” Segal said, adding that her clients have been addressing the issue for nearly a decade. “And the time they’ve spent administratively focusing on it … has exhausted them.”
Douglas Miller, president of the Blue Point Volunteer Exempt Fireman’s Benevolent Association, said the roughly $22,000 in funds his department receives from insurance carriers is used to pay injured members’ monthly bills. But with the cost of living rising – and insurance carrier tax revenues largely unchanged – the benevolent club is struggling to provide for its members.
“We’ve resorted to our own fundraising and it’s becoming almost a full-time job at this point,” said Miller, who is also vice president of the Benevolent Association of the Long Island Association of Firemen’s. “And that was not the intention of this money. So we just hope it gets reported accurately.”
Robert Brodsky is a breaking news reporter who has worked at Newsday since 2011. He is a graduate of Queens College and American University.
