N.J., N.Y. to Offer Mediation Option for Disputed Sandy Claims

New Jersey Gov. Chris Christie announced on Feb. 25 his administration would offer a mediation program to Sandy victims who are still in dispute with their insurers.

Christie said his administration is establishing a new mediation process that gives consumers the option to settle disputed cases without resorting to costly and time-consuming lawsuits.

“This process is needed to help alleviate the hardship being experienced by residents whose property was damaged or destroyed by Sandy,” Gov. Christie said. As of Feb. 15, the percentage of claims closed was 87 percent overall and 91 percent for homeowners, the governor said.

“This mediation program is an opportunity to expediently resolve outstanding claims so that residents can continue to rebuild their lives.”

Insurance carriers will pay for the cost of the mediator.

The mediation program will allow property owners to submit homeowner’s, auto and commercial property claims to a mediator who will review the case and assist in settlement discussions.

The program will be available for 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.

New Jersey’s mediation effort will not include flood insurance claims at the inception of the program because those claims are handled by the National Flood Insurance Program (NFIP) pursuant to federal regulations. However, regulators are assessing the viability of adding NFIP participation in certain mediations at a later date.

Under the program, state-regulated insurers are required to notify insureds with open or unresolved homeowner’s, auto and commercial claims that they can ask for a mediation conference and instructions for filing that request.

Participation by policyholders is voluntary. Surplus lines insurers and risk retention groups may elect whether or not to participate on a case-by-case basis.

Meanwhile, in New York, Gov. Andrew Cuomo also announced a similar mediation effort to assist Sandy victims.

Cuomo said on Feb. 25 the state’s Department of Financial Services has established a voluntary mediation process for homeowners disputing their claims or dissatisfied with denials of their claims arising from Sandy.

The New York program will be administered by the American Arbitration Association. The program would handle disputed real and personal property claims – other than those regarding motor vehicle damages – that arose between Oct. 26, 2012 and Nov. 15, 2012 in the counties of Bronx, Kings, Nassau, New York, Orange, Queens, Richmond, Rockland, Suffolk or Westchester. Claims made under the National Flood Insurance Program are not eligible.

New York regulators said insurers would be required to notify their homeowners of the right to mediate eligible claims. Insurers will also foot the bill for the mediation costs.

The mediation is not binding on the homeowner and will not affect the homeowner’s other legal rights.

Insurers to Follow Additional Rules

Separately, New York regulators also announced on Feb. 26 they would be requiring insurers to follow additional rules to help expedite the resolution of remaining Sandy claims in New York.

Under current insurance regulations in New York, after a homeowner provides proof of loss, insurers have 15 business days to respond with a decision. But if an insurer is unable to reach a decision in that time, the insurer must provide the homeowner with a reason needed for additional time – but doing so grants the insurer an automatic 90-day extension.

There is no limit on the number of additional 90-day extensions available to an insurer. Insurers also must provide claimants notification of any documents needed to complete their proof of claim within six business days of receipt of the claim.

The New York Department of Financial Services announced that regulators are instituting the following changes, as a response to consumer complaints that insurers are taking too long to accept or deny Sandy-related claims:

• 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 the Department of Financial Services – on a weekly basis – every claim that has been extended past the initial 15 business day decision window.

Topics Carriers New York Claims Flood Homeowners