Despite the extremely, and blessedly, quiet hurricane season of2013, the insurance industry has received "regulatory reminders"this year not only about what states are  empowered to doin the event of a catastrophic event, but also what they mostlikely would do in implementing emergency measures.

As might be expected, much of what was issued recently comesfrom those states most impacted by Superstorm Sandy. Insurers maywant to take note of these recent guidance and reminder documentsand consider assessing their own emergency response plan in lightof possible regulator plans and expectations.

Established Mediation Programs

Connecticut's HB 6549 (2013), which was effective Oct. 1, 2013,authorizes its insurance department to establish a mediationprogram for any open claim for loss or damage as a result of acatastrophic event for which the Governor has declared a state ofemergency. The statute addresses personal or real property coveredunder certain personal risk insurance policies, condominiumassociation master policies or unit owners' association propertyinsurance policies.

Insurers licensed to write the applicable lines of insurancewill be required to participate in the mediation program.Connecticut law defines an eligible claim as "any dispute betweenan insured and such insured's insurer arising from suchcatastrophic event in which the difference between the position ofthe parties for the actual cash value or the amount of loss is$5,000 or more, notwithstanding any applicable deductible, exceptthat the parties may agree to mediate a dispute involving a lesseramount."

Key Claims Processing Provisions

In addition to the legislative provision on mediation programs,the Connecticut Insurance Department issued Bulletin IC-33 on June25, 2013, setting forth its position concerning claims processingprocedures, as well as the suspension of premium payments forinsured disaster victims, throughout the duration of the Governor'sdeclaration of a state of emergency. Key claimsprocessing provisions addressed in the Bulletin include theDepartment's expectation that insurers, licensees, and interestedparties would take the following actions upon receiving notice of aclaim:

• Promptly establish contact with the claimant.
• Promptly survey and assess the claimant's damage.
• Provide prompt and accurate responses to claimants.
• Provide prompt payment for additional living expenses (ALE) andfor temporary repairs after the assessment of the insured'sdamage.
• Promptly set appointments with the claimant for examination andresolution of all claims matters.

Requirements Affect Underwriting, Claims

The Rhode Island Insurance Division has adopted amendments toits Regulation 110 entitled "Property Insurance and Weather RelatedClaims." Included in these revisions, which became effective Oct.3, 2013, are new regulatory requirements concerning policycancellations, non-renewals or premium increases/surcharges thatprohibit an insurer from taking such actions solely as a resultof:

• A policy or claim inquiry, a loss with no payout or a loss witha payout of less than $500 unless there has been more than onenon-catastrophic claim in a three-year period that has resulted ina loss payout.
• A loss sustained as a result of a catastrophic event.
• Prior claims experience of the property while under ownershipof someone other than the current insured unless the risk fromwhich the claim originated has not been mitigated.

It is critical that both claims and underwriting personnelimplement the required procedural changes to ensure the correctclaims information is provided to underwriting and that suchinformation is used in a consistent and compliant manner.

Regulation 110, as amended, will also permit the ordering of amediation program by the Division following a hurricane via theissuance of a bulletin that "subjects all claims under personallines insurance policies that occurred as a result of damage toresidential property caused by a specific hurricane to nonbindingmediation at the election of the insured in accordance with thisregulation." Another new section concerns the authority of theDivision to undertake specific emergency measures in the event of acatastrophe declaration by ISO.

New York's Circular Letter No. 8 (2013), which was issued Oct.28, 2013, continues to echo recent provisions issued in otherstates impacted by Superstorm Sandy. The New York Department ofFinancial Services provides information on the "variouspost-disaster regulatory measures they should anticipate in theevent that the President of the United States or the Governor ofNew York ('Governor') declares a State Disaster Emergency in all orsome New York State counties in the wake of a disaster orcatastrophe" October 28, 2013). Examples of the types of claimsmeasures which could be employed include:

• Processing of claims – It is expected that insurers andlicensees would take the following actions upon receiving notice ofa claim:
• Promptly establish contact with the claimant.
• Promptly survey and assess the claimant's damage.
• Promptly comply with any Department directive relating to theactivation of the Insurance Emergency Operations Center.
• Promptly respond to Department inquiries, including inquiriesmade relating to consumer complaints filed with theDepartment.
• Promptly inform claimants of any documents that must besubmitted to complete a claim.
• Provide prompt and accurate responses to claimants.
• Provide prompt payment for additional living expenses (ALE) andfor temporary repairs after the assessment of the insured'sdamage.
• Promptly set appointments with the claimant for examination andresolution of all claim matters.
• Expedited process for adjuster licensing including onlineprocessing.
• Claims data reporting in accordance with the form andrequirements adopted by the Northeast Zone of the NAIC. Additionaldata could also be requested and report cards on insurerperformance may also be utilized.
• A mediation program could be implemented with claimseligibility likely tied to the following situations: (a) when aninsurer had denied a claim in whole or in part; (b) when theinsurer received notification from the insured that the amount incontroversy had exceeded a defined dollar threshold amount (such aswhere the amount in dispute equals or exceeds $1,000); or (c) theinsurer had not offered to settle within a specified period of timeafter it had received a properly executed proof of loss and allitems, statements and forms that the insurer had requested from theinsurer.

The Circular Letter also mentions possible additionalclaims-handling measures adopted by the Department in the wake ofSuperstorm Sandy in 2012, including: permitting immediate,necessary repairs; and broadening proof-of-loss-documentation toinclude photographs, video recordings, material samples, receiptsand inventory listings.

Being prepared for the next unfortunate, but inevitable,catastrophic event is never easy from either a personal orprofessional perspective. However, these recent legislative andregulatory updates from Connecticut, New York, and Rhode Island doprovide the industry with a set of expectations and alternativesthat can be used now to assess, and perhaps adjust, insurers'existing emergency policies and procedures to accommodate thisstate-specific guidance.

From a "best practices" perspective, other states may also lookto the Superstorm Sandy affected states and consider issuingsimilar guidance documents addressing claims issues and mediationprograms which can be adapted to other types of catastrophic eventsmore likely to impact their geographical areas. It is alsoimportant to note that while some states have issued pre-emptiveand planning information, insurers would still need to monitorstate updates during an actual catastrophe and its aftermath toensure compliance with the oftentimes day-to-day developments.Communication and planning in advance can work to everyone'sadvantage in processing claims resulting from catastrophicevents.