A Superstorm Sandy Retrospective: How the Actions of New York Regulators May Shape Responses to Future Natural Disasters

by Wilson Elser
Contact

A year after Superstorm Sandy came ashore, the New York Department of Financial Services (Department) issued Circular Letter No 8 of 2013 to inform New York licensed property/casualty insurers of the regulatory standards they should expect to encounter the next time a federal or state disaster emergency is declared. This regulatory guidance echoes the various actions that the Department implemented prior to the onslaught of Superstorm Sandy and for several months thereafter.

While the Department outlines the various regulatory guidelines it may impose when a State Disaster Emergency is declared, the Circular Letter also cautions that the Department may implement additional standards based on the specific circumstances of the emergency, including but not limited to tornados, flooding and earthquakes. The Circular Letter then details the types of actions that the Department may take in a future disaster. These actions are substantively similar to the actions that the Department took in the wake of Superstorm Sandy, as noted below.

Premium Payments
Specifically with respect to the difficulties involved in making premium payments during a state of emergency and pursuant to New York Insurance Law Section 3425 (p), the Department states that it is empowered to impose a moratorium on the termination, cancellation and renewal provisions of that law for a period not to exceed three months. A three-month extension period is also permitted under the statute. As to Superstorm Sandy, the Department began a moratorium of this nature effective October 26, 2012, and pursued its mandate into February 2013. Further, the Department reiterated the position it maintained earlier this year in Circular Letter No. 1 of 2013, requesting insurers to allow policyholders in disaster areas flexibility in terms of making premium payments.

Prompt Action Required
Additionally, the Circular Letter provides that insurers should take prompt action upon receipt of a notice of claim, particularly where the claim is a direct result of the disaster. The Department sets forth a number of steps that the insurer should take in a prompt fashion, including informing claimants of necessary documentation, providing fast and accurate responses to claimants, and promptly reimbursing them for additional living expenses and temporary repairs. Again, the Department warns insurers that additional claims-handling procedures may be initiated based on the nature of the Disaster Emergency. As to Superstorm Sandy, the Department relaxed certain standards relative to documentation needed for proof of loss, per Circular Letter No. 8 of 2012.

Claims Data Reporting
The Department states that it not only might require claims data reporting in accordance with the form and requirements adopted by the Northeast Zone of the National Association of Insurance Commissioners but also impose additional data reports to supplement this information. Such reporting can be required on a daily, weekly or other schedule, based on the specific circumstances of the disaster. The data would be used to compile insurer “report cards” such as the ones assembled following Superstorm Sandy.

Mediation Program
Also, the Department announced that a mediation program may be established to aid in the resolution of disputed claims. Such a program may not be available for certain types of claims, including claims involved in civil actions, claims made under the National Flood Insurance Program and claims made where there is a dispute as to coverage. With respect to Superstorm Sandy, a mediation program was instituted pursuant to a special amendment to New York Insurance Regulation 64 governing Sandy-related claims.

Expedited Licensing Procedure
Finally, the Circular Letter states that the Department may develop an expedited licensing procedure for independent and public adjusters. An expedited process was employed to address the need for adjusters after Superstorm Sandy, which, among other things, permitted adjusters licensed in other states to apply for a temporary adjuster’s licenses in New York.

What actions should Insurers take based on this new regulatory guidance?
Given the Department’s issuance of Circular Letter No. 8 of 2013, insurers should consider taking the following actions to promote compliance in the event of a future disaster emergency:

  • Insurers should review the various issues related to premiums, claims and administrative procedures experienced as a result of Sandy-related claims. This review process should identify the areas where the insurer would have difficulty complying with the standards set forth in the Circular Letter.
  • The insurer should then develop and incorporate into its disaster plans processes and procedures aimed at addressing any compliance issues. These processes and procedures should include an internal monitoring system for the adjudication of disaster-related claims to facilitate reporting to the Department, particularly where such reporting is required on a daily or weekly basis.

Visit our Superstorm Sandy Resource Center.

 

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.

© Wilson Elser | Attorney Advertising

Written by:

Wilson Elser
Contact
more
less

Wilson Elser on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.