Insurers licensed to write the applicable lines of insurance will be required to participate in the mediation program. Connecticut law defines an eligible claim as “any dispute between an insured and such insured's insurer arising from such catastrophic event in which the difference between the position of the parties for the actual cash value or the amount of loss is $5,000 or more, notwithstanding any applicable deductible, except that the parties may agree to mediate a dispute involving a lesser amount.”

Key Claims Processing Provisions

In addition to the legislative provision on mediation programs, the Connecticut Insurance Department issued Bulletin IC-33 on June 25, 2013, setting forth its position concerning claims processing procedures, as well as the suspension of premium payments for insured disaster victims, throughout the duration of the Governor's declaration of a state of emergency. Key claims processing provisions addressed in the Bulletin include the Department's expectation that insurers, licensees, and interested parties would take the following actions upon receiving notice of a claim:

• 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) and for temporary repairs after the assessment of the insured's damage.
• Promptly set appointments with the claimant for examination and resolution of all claims matters.

Requirements Affect Underwriting, Claims

The Rhode Island Insurance Division has adopted amendments to its Regulation 110 entitled “Property Insurance and Weather Related Claims.” Included in these revisions, which became effective Oct. 3, 2013, are new regulatory requirements concerning policy cancellations, non-renewals or premium increases/surcharges that prohibit an insurer from taking such actions solely as a result of:

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

It is critical that both claims and underwriting personnel implement the required procedural changes to ensure the correct claims information is provided to underwriting and that such information is used in a consistent and compliant manner.

Regulation 110, as amended, will also permit the ordering of a mediation program by the Division following a hurricane via the issuance of a bulletin that “subjects all claims under personal lines insurance policies that occurred as a result of damage to residential property caused by a specific hurricane to nonbinding mediation at the election of the insured in accordance with this regulation.” Another new section concerns the authority of the Division to undertake specific emergency measures in the event of a catastrophe declaration by ISO.

New York's Circular Letter No. 8 (2013), which was issued Oct. 28, 2013, continues to echo recent provisions issued in other states impacted by Superstorm Sandy. The New York Department of Financial Services provides information on the “various post-disaster regulatory measures they should anticipate in the event that the President of the United States or the Governor of New York ('Governor') declares a State Disaster Emergency in all or some New York State counties in the wake of a disaster or catastrophe” October 28, 2013). Examples of the types of claims measures which could be employed include:

• Processing of claims – It is expected that insurers and licensees would take the following actions upon receiving notice of a claim:
• Promptly establish contact with the claimant.
• Promptly survey and assess the claimant's damage.
• Promptly comply with any Department directive relating to the activation of the Insurance Emergency Operations Center.
• Promptly respond to Department inquiries, including inquiries made relating to consumer complaints filed with the Department.
• Promptly inform claimants of any documents that must be submitted to complete a claim.
• Provide prompt and accurate responses to claimants.
• Provide prompt payment for additional living expenses (ALE) and for temporary repairs after the assessment of the insured's damage.
• Promptly set appointments with the claimant for examination and resolution of all claim matters.
• Expedited process for adjuster licensing including online processing.
• Claims data reporting in accordance with the form and requirements adopted by the Northeast Zone of the NAIC. Additional data could also be requested and report cards on insurer performance may also be utilized.
• A mediation program could be implemented with claims eligibility likely tied to the following situations: (a) when an insurer had denied a claim in whole or in part; (b) when the insurer received notification from the insured that the amount in controversy had exceeded a defined dollar threshold amount (such as where the amount in dispute equals or exceeds $1,000); or (c) the insurer had not offered to settle within a specified period of time after it had received a properly executed proof of loss and all items, statements and forms that the insurer had requested from the insurer.

The Circular Letter also mentions possible additional claims-handling measures adopted by the Department in the wake of Superstorm Sandy in 2012, including: permitting immediate, necessary repairs; and broadening proof-of-loss-documentation to include photographs, video recordings, material samples, receipts and inventory listings.

Being prepared for the next unfortunate, but inevitable, catastrophic event is never easy from either a personal or professional perspective. However, these recent legislative and regulatory updates from Connecticut, New York, and Rhode Island do provide the industry with a set of expectations and alternatives that can be used now to assess, and perhaps adjust, insurers' existing emergency policies and procedures to accommodate this state-specific guidance.

From a “best practices” perspective, other states may also look to the Superstorm Sandy affected states and consider issuing similar guidance documents addressing claims issues and mediation programs which can be adapted to other types of catastrophic events more likely to impact their geographical areas. It is also important to note that while some states have issued pre-emptive and planning information, insurers would still need to monitor state updates during an actual catastrophe and its aftermath to ensure compliance with the oftentimes day-to-day developments. Communication and planning in advance can work to everyone's advantage in processing claims resulting from catastrophic events.