New York regulators said this week insurers would be required to follow additional rules to expedite the resolution of remaining Sandy-related claims in New York.
These new regulations will now cut the amount of time an insurer can delay its decision on a Sandy-related claim in New York. They will also require insurers to report to the state’s Department of Financial Services — on a weekly basis — how many claims are being delayed and individual reasons for each of the delays.
“While many claims in areas affected by Storm Sandy have been closed, the Department of Financial Services is still getting many complaints from New Yorkers whose claims have not been resolved,” New York Gov. Andrew Cuomo said in a statement Tuesday. “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.”
New York Financial Services Superintendent Benjamin Lawsky added that, “For the claims that are not being resolved, we want to understand what the problems are and what is causing the delays.”
“With more information, we may be able to help reconcile issues to the benefit of both consumers and the companies. The end goal is to ensure that homeowners receive any funds they are due as soon as possible,” Lawsky said.
Under current insurance regulations, after a homeowner provides proof of loss, insurers have 15 business days to respond with a decision. But if an insurer is unable to reach a decision in that time, the insurer must provide the homeowner with a reason needed for additional time — but doing so grants the insurer an automatic 90-day extension.
There is no limit on the number of additional 90-day extensions that are available to an insurer. Insurers also must provide claimants notification of any documents or forms needed to complete their proof of claim within 6 business days of receipt of the claim.
The Department of Financial Services announced regulators are instituting the following changes, as a response to consumer complaints that insurers are taking too long to accept or deny Sandy-related claims:
• If an insurer is unable to make a claims decision within the allotted time, extensions are now only 30 days, not 90 days.
• Any extension letter sent to an insured must provide not just the reason for the extension, but an estimate of the date the insurer expects the decision-making process to be completed.
• Insurers must report to the state’s Department of Financial Services weekly on every claim that has been extended past the initial 15 business day decision window. This report will include, among other items, the amount of the claimed loss, the reason needed for the insurer’s extension, the number of extensions the insurer already has utilized, and the expected date for its decision.
• Notification to claimants of what documents and forms will be needed to complete the claim must now be provided in a written, detailed document.
“Collecting this information will allow the department to monitor the claims process and the reasons for any delays in decisions. It also will encourage insurers to speed up the process of resolving claims,” Lawsky said.
New York regulators are now also offering a voluntary mediation program option for homeowners disputing their insurance claims or dissatisfied with denials of their claims arising from Sandy.
According to the latest data from 24 insurers that make up the most of the insurance market in New York impacted by Sandy, roughly 88 percent of their 390,793 Sandy-related claims in New York have been closed as of Feb. 22. That means there are still tens of thousands of claims that have not yet been closed.