In his continuing effort to address homeowner's concerns with claims filed as a result of Superstorm Sandy, Governor Cuomo has announced two changes to current regulations designed to further assist these consumers. The first initiative involves an amendment to New York Insurance Regulation 64 permitting Superstorm Sandy claimants to engage in voluntary mediation for disputed or denied claims. The second measure modifies claims processing procedures that would ordinarily apply to insurers reviewing claims.

Voluntary Mediation

The amendment to Regulation 64, which has been adopted on an emergency basis, requires insurers to notify claimants of their right to request mediation of a denied or disputed claim within certain time periods set forth in the regulation. This notice must include instructions on how the request should be made, including contact information for the organization designated by the Superintendent of the Department of Financial Services (Department) to provide mediation services. Certain types of “disputes” are excluded from the mediation process, including (1) disagreements concerning property valuation that has been appraised or is the subject of a claim in a civil action and (2) claims that the insurer reasonably believes may be fraudulent.

The insurer must act in good faith and is obliged to pay for the mediation services. The insurer must send a representative to the mediation who is knowledgeable with respect to the particular claim and who has authority to make a binding claims decision on behalf of the insurer. The claimants’ right to request mediation does not impact any other right that such claimants have to seek other remedies available to them. The mediation organization is subject to certain rules set forth in the regulation. Implementation of this type of voluntary mediation procedure was modeled after similar programs instituted by other states in the aftermath of natural disasters such as Hurricanes Andrew, Katrina and Rita.

Claims Processing Procedures

The Department has imposed new claims processing procedures in response to consumer complaints that many claims still remain unresolved. One of the key changes concerns the time period an insurer has to decide whether to pay a claim. Under current regulations, if an insurer is unable to make a determination within fifteen (15) days of receipt of proof of loss, such carrier can receive unlimited 90-day extensions of time to reach a decision as long as it provides the insured with the reason for needing the additional time. Under the new procedure for Sandy-related claims, such extensions are limited to thirty (30) days and the insurer must provide the insured with an estimate of when the claim will be resolved. Additionally, insurers using the 30-day extension period, must provide weekly reports to the Department of each claim subject to such extension, the amount of the claimed loss, the reason the extension is needed, the number of extensions that have already been used for that claim and the expected date of determination. Also, insurers must provide written detail of the documents and forms that are necessary for the insured to complete the submission of a claim.