The New Jersey Department of Banking and Insurance (Department) has established a mandatory mediation program for unresolved first-party Sandy claims under homeowners, automobile and commercial insurance policies. Insurers are required to provide written notice, on or before April 8, 2013, to policyholders with open and unresolved claims informing them of the program’s availability. A sample notification letter was provided in Bulletin No. 13-08, issued by the Department on April 2, 2013, to correct an erroneous American Arbitration Association (AAA) facsimile number to forward mediation requests. (Note: Insurers should not use the sample notice provided in Bulletin No. 13-07 due to the erroneous facsimile number.)

Insurers authorized or admitted to transact business in New Jersey are required to participate in the mediation program, which, with few exceptions, applies to all open and unresolved first-party Sandy claims. In Order No. A13-106 and Bulletin No.13-07, the Department outlines the program’s features and procedures, and establishes the AAA as its Administrator.

In addition to the notice requirement, key features of the mediation program include:

  • Voluntary policyholder participation. It is a policyholder’s option to request a mediation conference.
  • If mediation is requested by a policyholder, insurers must participate.
  • Mediator and the AAA’s fees shall be paid by the insurer.
  • For new or reopened Sandy claims, notice of the availability of the mediation program must be provided in any offer of claim settlement or claim denial, or no later than 60 days after a claim is submitted, or reopened if a claim settlement or denial has not been issued.
  • If a policyholder requests mediation, the insurer must forward the request to the AAA within one business day of receipt.
  • Mediation conferences must be held within 30 days after receipt of a mediation request unless the parties agree to an extension.
  • The Department and the AAA will establish mediation guidelines and provide additional information on the mediation program and publish this information on the AAA website.
  • Surplus lines insurers and risk retention groups may elect to participate in the mediation program on a case-by-case basis.