Anyone acting as arbitrator in appraisal valuation of property claims must exercise their duty with absolute impartiality and objectivity. The following practices are violations of those duties:

• Having economic interest, directly or indirectly, in the claim or result; • Establishing the payment of their fees based on the result of the process; • Be an employee, shareholder, member, partner, official director or representative of the insurer or insured or appraisers, including independent or public adjusters; • Have family ties within the fourth degree of consanguinity (first cousins) or affinity second (brother or sister-in-law, spouses grandparent, grandchild, grandchild's spouse or spouse of grandparent), or reside with one of the "appraisers" who is participating in the process; • Failure to inform the parties of any professional relationship or circumstances you have had with any of the parties or their representatives that would raise doubts as to impartiality; • Failure to timely notify the insurer/insured or inhibit their role in the appraisal process when a potential conflict of interest comes up.

Additional content is added to Article 11.150 under (1) A policy may contain additional provisions that are not incompatible with this Code, and that they are: (a) (b)…(2)… (these sections omitted in Law 242; it references them as listed). (3) Any property insurance policy, either commercial or personal, must contain a clause that provides for the resolution of disputes related to value or damages in a claim based on the process of appraisal. It is to be at the option of the insured without limiting the insured's ability to go to court or an administrative forum directly. For the sake of uniformity, it will be understood that the insurer complies with this requirement when the policy contains the "appraisal" language clause provided by the ISO policy language, if the insurer is a member of the organization, or the guidelines promulgated by NAIC in accordance with provisions of subsection (3) of Article 11.190 of this Code.

Article 11.190 is amended to read that Limitation of actions on policies, jurisdiction (1) No policy delivered or issued for delivery in Puerto Rico, covering an object of resident insurance located or to be executed in Puerto Rico will contain any condition, stipulation or agreement: (a)…(b)…(c)…(d)…(2) Any clause or stipulation in a contract or insurance policy that establish conditions that limit the insured from bringing a legal action against the insurer to a limited period of time of less than one year will be null; the validity of other policy provisions will remain intact.

(3) A valuation clause or appraisal clause in a commercial or personal insurance policy that states that any party may request in writing to submit to an impartial and competent arbitrator for the resolution of disputes around the valuation of damages or loss in a claim is allowed. This clause must not constitute a waiver of the right of the insured to initiate legal action against the insurer. Arbitration is allowed when the insurer has accepted that the claim is covered by the policy. Under this section "arbitrator" means an impartial and competent selected party within the assessment process to resolve disagreements exclusively related to the value of a loss or damages to one or more items of the claim in commercial or personal property insurance policies.

The arbitrator will be selected by mutual agreement between the insurer's and the insured's appraisers. If they cannot agree on an arbitrator within fifteen days from when the valuation is requested, the Office of the Insurance Commissioner will select the arbitrator. The arbitrator has no authority over coverage disputes or questions of law. When two of the three parties agree on an amount, the decision will be binding, although the dissatisfied party can go to the Court of First Instance to challenge the decision.

The insurer and the insured each pay equal portions of the arbitrator's fees, and pay for the expenses of their own appraisers. The arbitrator must establish his fees in writing indicating how they are calculated (by hour, day, or session) before the assessment process begins. The Commissioner has the power to adopt any rules and regulations that he deems necessary to regulate the valuation process, and the suitability and competence criteria for those acting as appraisers or arbitrators.

A claim notification to the insurer or authorized representative constitutes an extrajudicial claim that interrupts the actions of Article 1873 of the Civil Code even when the claim is a result of Hurricanes Irma or Maria. This is for direct action by a property owner to recover damages from the insurer. Likewise, the acceptance of a claim notification by the insurer or authorized agent constitutes acknowledgement that interrupts the prescription of actions under Article 1873 of the Civil Code, even if the damages are from Hurricanes Irma or Maria. The time limit to file a claim or an administrative proceeding, imposed by an insurance company is also subject to be interrupted by extrajudicial notification again due to Article 1873. Any agreement to the contrary will be null, even when a result of Hurricanes Irma and Maria.

Section 4. – Section 5.005 of Act 201-2003, known as the "Judiciary Act of Puerto Rico of 2003" is amended such that the Supreme Court, in a state of emergency declared by the Governor, may establish "Specialized Chambers in Insurance Claims" in each Judicial Region that includes the Chambers of the Court of First Instance (primary jurisdiction). These chambers are to be presided over by judges with training, experience and/or specialized knowledge in Insurance Law. These chambers will have jurisdiction over disputes over coverage, limits, interpretation of the terms or conditions of the policy, disagreement with the payment determination of the insurer, when the insured does not submit to the appraisal process in the policy or any other controversy related to insurance claims. The Supreme Court may adopt all administrative measures necessary for the assignment and training of these judges, and establish a special work schedule that promotes expeditious and efficient handling of these cases.

Section 5 – Separability. If any clause, paragraph, sentence, word, letter, article, section or part of this Act were annulled or declared unconstitutional, said ruling or opinion will not affect the rest of the Act. Such rulings are limited to the specific text involved. The courts will enforce provisions and application of this Act to the fullest extent possible even if it voids, annuls, invalidates or otherwise declares any of its parts unconstitutional, or if it is rendered invalid, ineffective, or damages or declares its application to any person unconstitutional.

Law 243- Adds a new Article 27.166 to Act No. 77 of the Insurance Code to allow the Office of the Commissioner to order property insurers to issue partial or advance payments to insureds or claimants following a catastrophe. If a state of emergency is declared by the governor, the Office of the Commissioner of Insurance is empowered to instruct property insurers to issue partial or advance payments to the insureds or claims regarding items of insurance that do not have controversy without the need for a final resolution of the claim. Requirements are as follow:

• When there is no question of coverage and the insured has provided the required documentation to the insurer, the insurer will be obliged to issue payment for those parts of the claim regardless of the other items in the claim that may be in dispute. The payment is to be made no later than ten calendar days from the date the insured/claimant notifies the insurer in writing about the acceptance of partial payment or in advance. Payment is to be for the net amount less deductible or any co-insurance listed in the policy. • In any offer of partial or advance payment, the insurer will clearly and conspicuously identify that the offer is partial or advance payment, including a written report identifying which coverages the payment is made under and a breakdown corresponding to each of the items in the offer. • Offers to pay a claim in which the claim is not identified and the coverages under which the amount of damage corresponds, including the amount of deductible and coinsurance is disregarded, is considered an unfair practice subject to the penalties of Article 27.260 of this code. • Acceptance of partial or advance payments by a claimant/insured does not constitute nor may it be interpreted as payment in settlement or waiver of any right or defense that the insured may have over other components of the claim that are in controversy. • Partial or advance payments do not constitute a final resolution of the claim.

The same separability provisions seen in Law 242 are present here as well. Any invalidation of any particular part of this Act that is declared unconstitutional or invalid does not affect or invalidate other sections of the Act that may be validly applied.

Law 244 – This Law amends Section 2.110 and adds new Article 3.331 to Act 77 of the Insurance Code. The amendment to Article 2.110 states that the Commissioner will examine each insurer no less than once every five years regarding its financial situation. The Commissioner may hire competent auditors to conduct examinations, and the insurers shall reimburse the Office for expenses to conduct the examination, as long as the Commissioner submits a detailed account of the expenses to the insurer. If the examination is carried out by employees of the Insurance Office, expenses will not be claimed.

Article 3.331 Response Plan for a Catastrophe or Emergency is a new section of the Insurance Code. Insurers authorized to conduct business in Puerto Rico are to establish and maintain a response plan to catastrophic or emergency events. The plan must establish a process to ensure continuity of services and operations, and be certified by a professional expert in business continuity planning or disaster recovery. The plan must include the following: • A description of the strategic processes for the continuity of the services and operations after a catastrophic or emergency event; • Processes for the activation of emergency adjusters and/or use of adjusters from other states or foreign countries, including required work permits and training in claims adjustment; • Emergency telephone lines for information and assistance services; • Facilities or temporary locations to operate and assist claims; • Backup systems for the protection of electronic information; • Inventory of suppliers of equipment and supplies necessary for continuing operations including electronic generator and fuel supplies; • Any other requirement that the Commissioner by rule or regulation establishes to protect the public interest and safeguard the interest of insurance consumers.

This response plan is to be submitted to the Commissioner on or before March 31 of each year. If there has been no change in the response plan previously certified by the business continuity planning or disaster recovery expert, then an annual certification is not required. The plan must be reviewed and certified every five years. Insurers that do not comply with this requirement will be subject to an administrative fine up to $10,000 and/or the suspension or revocation of the authority certificate.

The same separability provisions seen in the earlier laws apply here. Any invalidation of any particular part of this Act that is declared unconstitutional or invalid does not affect or invalidate other sections of the Act that may be validly applied.

Law 245- This amends Article 10.071 of the Insurance Code of Puerto Rico and adds 10.072, and renumbers the existing article 10.072 to 10.073. Of particular concern is coverage for the commercial and industrial sectors, as costs have increased significantly and access to other markets has been restricted. Therefore, Article 10.071 is amended so that excess and surplus lines brokers cannot process an insurance contract with an unauthorized insurer unless that insurer is an eligible surplus lines insurer. To be considered an eligible surplus lines insurer, the insurer must:

• Have capital and surplus of not less than $15,000,000 and be authorized to process in its state of domicile for the classes of insurance it wants to provide. The Commissioner may make exceptions by taking into consideration other factors. • Be included in the NAIC Quarterly Listing of Alien Insurers, or have no less than fifteen million and deposit with the Secretary of Treasury of Puerto Rico or a designated bank an amount determined by the Commissioner based on the insurer's volume. The amount will not be less than $50,000 for single insurers or $300,000 for a group of insurers.

Section 10.072 – Process of Circulation of Property Risks and Commercial Contingency. This new section of the law states that a surplus line broker may process or place a property or business contingency cover for a surplus line insurer under certain conditions. The first is if three authorized insurers have declined to accept all or part of the risk. If the insurer does not respond within seven days, that is considered a declination. The cover is procured or requires a surplus lines insurer in accordance with 10.071. "The broker must disclose in writing to the insured that the insurance may not be available in the standard market and that in event of insolvency the insured is not covered by the Miscellaneous Insurance Guarantee Association. The insured is to make an acceptance of the coverage in writing. Except as specified in Article 10.070 of the insurance code, a surplus lines broker may place surplus lines coverage from an eligible insurer for an exempt merchant as defined in the "Nonadmitted and Reinsurance Reform Act" and parameters in subsection 1 of this article.

The current Section 10.072 is renumbered as Section 10.073 of Act No. 77 of June 19, 1957 as amended, better known as the "Insurance Code of Puerto Rico". The section is not titled Article 10.073 Withdrawal of eligibility of non-authorized insurer. If any clause, paragraph, section, or part of the Act were annulled or declared unconstitutional, the resolution to that effect will not harm or invalidate the remainder of this Act. Such an action applies only to the section referenced in the declaration.

The courts are to enforce the provisions and application of this Act to the greatest extent possible, even if it repeals, invalidates annuls, invalidates or declares any part of it unconstitutional.