In an effort to resolve outstanding non-flood-related insurance claims from Superstorm Sandy, New York’s governor has established a mediation program and established new rules to speed the insurance-claims process.
Gov. Andrew M. Cuomo said yesterday that the Department of Financial Services created a voluntary mediation process for homeowners who are disputing their insurance claims or are dissatisfied with the denial of a claim. Cuomo called it a speedy and low-cost resolution for contested homeowners claims and “a win for everybody.”
Superintendent of Financial Services Benjamin M. Lawsky said that, under the emergency regulation, insurers will offer and pay for voluntary mediation.
The American Arbitration Association will administer the process, which Cuomo noted successfully resolved over 70 percent of past claims disputes after major hurricanes in the United States.
Today, the governor announced new rules that reduces the amount of time an insurer can delay a decision on a claim and requires carriers to report the number of delays and why.
“These new regulations will push insurers to move those claims as quickly as possible so people can repair their homes and get back to their lives,” Cuomo said.
The rule cuts the extension period for insurers to make a decision from 90 days to 30 days and requires insurers to estimate the date of their decision. It does not limit the number of extensions available to insurers.
Insurers must report to the department all extensions past the initial 15-business-day decision window along with the amount of the reported loss, the reason for the extension and the number of extensions utilized.
Cuomo also said today that Fannie Mae and Freddie Mac agreed with the state’s request for new rules reducing restrictions on how banks and mortgage servicers can release insurance money to homeowners with a mortgage.
Hold-ups had emerged since insurance-settlement checks issued jointly to homeowners and lenders require the bank’s endorsement before funds are released. Fannie Mae and Freddie Mac rules limited the amount of insurance money the banks can release pending monitoring and completion of repairs.
The new rules give banks greater discretion to disperse the insurance money.
Insurers have settled the vast majority of claims in New York, notes Ellen Melchionni, president of the New Insurance Association.
Citing figures released by the governor’s office, she says 94 percent of the 287,000 residential-property claims have been fully resolved and points to a satisfaction rate of 99 percent based on the number of complaints filed with the state compared to claims filed.
“Despite the numerous challenges we face outside of our control, companies have responded quickly to policyholders and in a positive manner,” she said.
Addressing the extension-period cut, she said insurers need to fully review legitimate claims to ensure fair and quick payment.
“Every claim is unique and different,” she said. “Some can be settled very quickly while complex claims may take longer to review.”