Yesterday New York Governor David Paterson spoke of plans to revive a global insurance exchange in New York. The New York Insurance Exchange (NYIE) would bring buyers and sellers of complex commercial insurance closer together, providing increased transparency and security for everyone in the process. Ã¢â‚¬Å“The exchange will reaffirm our status as the hub of international trade and finance and it will also curtail the unregulated transactions that devastated the global economy,Ã¢â‚¬ Governor Paterson said. This is not the first time that the idea has been raised. Former New York Insurance Superintendent Eric Dinallo sought input from the industry about reviving the exchange in early 2009 after first suggesting the move in 2008. The exchange would operate in a similar way to LloydÃ¢â‚¬â„¢s of London, Governor Paterson said, and would enhance New YorkÃ¢â‚¬â„¢s status as the worldÃ¢â‚¬â„¢s financial center stimulating the economy by increasing the flow of capital and insurance premiums to New York. Hard-to-insure risks and the economic benefits resulting from them generally find a home in offshore jurisdictions like Bermuda, Ireland, Switzerland and LloydÃ¢â‚¬â„¢s. In the process, New York loses jobs and tax revenue, he said. It is estimated that an additional $7 billion to $10 billion in premium dollars could be generated by an efficient, revitalized exchange. We like the timing of this announcement, compared to last year. Reviving the exchange could lead to greater coverage choices for buyers of insurance and increased competition in the market as well as stimulating economic growth in New York. At the same time, capital funding for such an exchange is likely to be easier to come by than it would have been two years ago or even last year. However, from the perspective of buyers and risk managers it remains to be seen what specific marketÃ‚ need the exchangeÃ‚ would address and how successful it would be compared to well-capitalized and established markets catering to complex risks. A New York Times article by Mary Williams Walsh notes that it would be easier for New York to create an insurance exchange than other states because it attempted to start one in the 1980s. That attempt failed, but apparently the enabling legislation is still on the books.