Connecticut Allows Insurance Department to Establish a Mediation Program for Claims Stemming from Catastrophe

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In February and March, New York and New Jersey instituted voluntary mediation programs for open and unresolved Superstorm Sandy insurance claims. On Friday, June 21, 2013, Connecticut’s Governor Daniel Malloy signed a measure inspired by the storm that empowers the state’s insurance commissioner to set up a similar program after any “catastrophic event” that has prompted the governor’s office to declare a state of emergency.

The Act – H.B. 6549 – was passed unanimously in both the state House and the state Senate. It takes effect on October 1, 2013, which means that it will have little impact on Superstorm Sandy claims.

As initially drafted, H.B. 6549 made such a mediation program mandatory for any events that prompted an emergency declaration, but that was changed at the insurance department’s request to allow for a case-by-case evaluation by the commissioner. There have been six emergency declarations in Connecticut since 2011.

The Act states that the insurance department “may establish a mediation program for any open claim for loss or damage to personal or real property” arising under either a “personal risk insurance policy” or one involving condominium owners. Automobile policies are exempt, as are contracts of insurance issued under the National Flood Insurance Program. In addition, the Act applies only to claims where the amount in dispute is at least $5,000, though the policyholder and the carrier may agree to mediate disputes involving a lessor amount.

The Act provides that the insurance commissioner shall designate the entity that will conduct the mediations. Insurers will then be responsible for paying any mediation fees; the carriers are not responsible, however, for any other policyholder costs such as those incurred for “advisors, representatives, attorneys or public adjusters.” As in New York and New Jersey, the proceedings are “confidential and will not be admitted into evidence in any civil action concerning the claim” unless insurance fraud is involved. Details such as the form, manner and time for policyholder notification will be spelled out in future insurance department regulations.

 

 

Topics:  Hurricane Sandy, Insurers, Mediation, Natural Disasters

Published In: Alternative Dispute Resolution (ADR) Updates, General Business Updates, Insurance Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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