New York and New Jersey, two of the U.S. states majorly affected by last fall’s Superstorm Sandy, have each launched new efforts to speed up claims dispute settlement.
In New York, a new regulation reduces the amount of time an insurer can delay its decision on a claim, and requires insurers to report to the state’s Department of Financial Services (DFS) on how many claims it is delaying and the reasons for the delays, notes a government statement.
“While many claims in areas affected by Storm Sandy have been closed, the Department of Financial Services is still getting many complaints from New Yorkers whose claims have not been resolved,” the state’s governor Andrew Cuomo explained in a statement.
Under current regulations in the state, insurers must respond to a homeowner’s claims with a decision on payment within 15 days, but if a decision hasn’t been reached, the insurer can provide a reason as to why not and defer for 90 days. Those 90 day deferrals can be repeated an unlimited number of times.
In response to delayed claims payments following the storm, the state government announced the following changes:
- If an insurer is unable to make a claims decision within the allotted time, extensions are now only 30 days, not 90 days
- Any extension letter sent to an insured must provide not just the reason for the extension, but an estimate of the date the insurer expects the decision-making process to be completed.
- Insurers must report to DFS weekly on every claim that has been extended past the initial 15 business day decision window. This report will include, among other items, the amount of the claimed loss, the reason needed for the insurer's extension, the number of extensions the insurer already has utilized, and the expected date for its decision.
- Notification to claimants of what documents and forms will be needed to complete the claim must now be provided in a written, detailed document.
Similarly, New Jersey’s Department of Banking and Insurance (DOBI) announced the release of a Request for a Qualification (RFQ) to establish a new mediation process to settle disputes.
“This process is needed to help alleviate the hardship being experienced by residents whose property was damaged or destroyed by Sandy,” Governor Chris Christie noted.
“As of February 15, the percentage of claims closed is now 87% overall and 91% for homeowners. This mediation program is an opportunity to expediently resolve outstanding claims so that residents can continue to rebuild their lives.”
Under the new program, policyholders can submit homeowner's, automobile and commercial property claims to a mediator who will review the case and assist in settlement discussions.
“Disputed non-flood Sandy-related claims greater than $1,000 that do not include a reasonable suspicion of fraud and are based on policies in force at the time Sandy made landfall will be eligible for mediation,” a government statement notes. Flood claims aren’t included because they are handled by the National Flood Insurance Program.
Insurers must pay the cost of the mediation and notify their policyholders about the measures.