On 26 February 2013, the New York State Department of Financial Services (“DFS”) reissued the emergency regulations originally issued on 29 November 2012 to address the handling of claims relating to losses from Superstorm Sandy. While acknowledging that 94% of the claims relating to residential property policies have been fully resolved, the DFS asserted that “[i]nsurers insuring property in affected areas have not always begun investigating claims, including by deploying insurance adjusters to adjust claims, in a prompt manner…and many claims…are still pending with insurers.” Additionally, on 21 February 2013, New York Governor Andrew Cuomo and Superintendent of Financial Services Benjamin Lawsky announced that the DFS was investigating three insurers over their handling of Superstorm Sandy claims. The fact that the DFS apparently did not discuss its concerns with the three insurers before a formal investigation was publicly announced suggests a prosecutorial approach to the industry that commentators have attributed to Superintendent Lawsky’s background as a former prosecutor.
The emergency regulations amend Insurance Regulation 64, New York’s Unfair Claims Settlement Practices and Claim Cost Control Measures Regulation, to require insurers to do the following with respect to Superstorm Sandy claims:
Commence investigations within six business days of receiving notice of a claim (instead of within 15 business days – the usual time period for non-Sandy claims).
- If the insurer wishes to inspect the damaged or destroyed property, the inspection must occur within the six business day period.
- Furnish to every claimant or its authorized agent a written notification detailing all items, statements and forms, if any, that the insurer reasonably believes will be required of the claimant, within six business days of receiving notice of the claim (instead of within 15 business days – the usual time period for non-Sandy claims).
Notify the claimant in writing if the insurer needs more time to determine whether the claim should be accepted or rejected within 15 business days after receipt of proof of loss or requested information.
- The notification must include the reasons additional time is needed and the anticipated date a determination on the claim will be made.
- If the claim remains unsettled, unless the matter is in litigation or arbitration, the insurer shall, 30 days from the date of the initial notification, and every 30 days thereafter, send to the claimant or its authorized agent a letter setting forth the reasons additional time is needed for investigation and the anticipated date a determination on the claim will be made.
If the insurer fails to notify the claimant in writing of the insurer’s acceptance or rejection of the claim within 15 days, the insurer is required to submit a weekly report to the DFS specifying the following:
- the date the loss was alleged to have occurred;
- the date the claim was filed with the insurer;
- the date a properly executed proof of loss and receipt of all items, statements and forms required by the insurer were received by the insurer;
- the alleged estimated amount of the loss;
- the reason given for the extension;
- the anticipated date a determination will be made on the claim provided to the claimant;
- how many extensions have been requested on that claim; and
- the ZIP code where the loss occurred.