New York licensed insurers are now required to participate in nonbinding mediations with certain Storm Sandy claimants who have disputed or unresolved claims. Insurers are required to send notices of the mediation option at specific times. If mediation is requested by a claimant, an insurer must participate in good faith, send a representative with claims settlement authority, and be prepared with a reasonable explanation if it does not alter its original decision concerning the claim.
On February 25, 2013, the New York Department of Financial Services promulgated an amendment to Insurance Regulation 64 on an emergency basis (the "Emergency Regulation"). The Emergency Regulation is intended to provide another avenue for the resolution of insurance claims resulting from Storm Sandy. It establishes a voluntary and nonbinding mediation program for disputed or unresolved claims for loss or damage to real and personal property (except for damage to a motor vehicle) that occurred from October 26, 2012 through November 15, 2012 in Bronx, Kings, Nassau, New York, Orange, Queens, Richmond, Rockland, Suffolk and Westchester counties and their adjacent waters. The Emergency Regulation requires insurers to provide notice to claimants who have disputed or unresolved claims of their new right to request mediation under the Emergency Regulation. Insurers are also directed to pay the mediation fee charged by the organization conducting the mediations.
The Emergency Regulation, 11 NYCRR 216.13, directs insurers to provide notice of the mediation program to claimants (1) at the time the insurer denies a claim in whole or in part, (2) within ten business days of the date that the insurer receives notification that the claimant disputes a settlement offer (if the difference between the parties is $1,000 or more), and (3) within two business days if the insurer has not made an offer to settle within 45 days after its receipt of proper proof of loss as well as items, statements and forms requested by the insurer. For unresolved claims that were either denied prior to the effective date of the Emergency Regulation, or where more than 45 days have elapsed following the insurer's receipt of the proof of loss, the insurer must provide notice to the claimant within ten business days of the Emergency Regulation's February 25, 2013 effective date.
If a claimant requests mediation, the insurer must send a representative to the mediation who has the authority to make a binding claim decision and to issue payment on behalf of the insurer. The insurer's representative must participate in good faith and must provide a reasonable explanation if the insurer does not alter its original claim decision.
The mediation program does not apply to disputes concerning property valuation that have been submitted to an appraisal process, or to claims that are the subject of civil actions filed against the insurer. The mediation program also does not apply to claims made under flood insurance policies issued under the national flood insurance program.
Please contact the authors for more information about this important regulation.