Kenneth Kobylowski, commissioner for New Jersey’s Department of Banking and Insurance, announced on March 28 that his department has selected the American Arbitration Association to administer a mediation program for still-unresolved first party claims for Superstorm Sandy-related homeowners, auto and commercial insurance policies.According to department’s bulletin, insurers authorized or admitted to transact business in New Jersey and the New Jersey Insurance Underwriting Association are required to participate in this newly established mediation program and resulting mediation conferences without involving courts.
New Jersey regulators said surplus lines insurers and risk retention groups may elect whether or not to participate on a case-by-case basis.
Insurers subject to mediation are now required to provide written notices to policyholders with open and unresolved homeowners, auto and commercial claims. In these notices, insurers are required to inform policyholders about the availability of the department’s mediation program. Policyholders with unresolved Sandy claims may choose to participate in the mediation program. This mediation effort is currently not available for disputes involving the National Flood Insurance Program claims.
The March 28 bulletin says the department and the American Arbitration Association would establish and publish mediation guidelines and provide additional information about the program and its operation for both insurers and policyholders on the association’s website, at www.adr.org, as well as on the Department of Banking and Insurance website, www.state.nj.us/dobi.
The department provided the following sample notice letter that insurers can use regarding the mediation program:
The New Jersey Department of Banking and Insurance has established a voluntary mediation program to resolve disputes between insurers and New Jersey policyholders involving claims against homeowners, automobile and commercial insurance policies as a result of Storm Sandy.
Mediation is a process where a neutral third party meets with you and your insurer to help you and your insurer reach an agreement that both parties will accept to resolve the claim. It is non-binding, meaning you do not have to accept the settlement. Policyholders may submit homeowner’s, automobile and/or commercial insurance Sandy-related claims where the disputed amount is $1,000 or more to a mediator who will review the case and assist in settlement discussions.
Your insurance coverage must have been in force at the time Sandy made landfall in New Jersey and the claim must not have been denied or delayed due to reasonable suspicion of fraud. Claims under policies issued by or through the National Flood Insurance Program are not subject to mediation in the Department’s program at this time.
Your insurance company pays the cost of the mediator and the program administration unless the policyholder fails to appear, in which case the costs of the cancelled mediation conference and any rescheduled conference are split evenly between both parties. Other expenses you may incur, such as travel to the mediation session, will be your responsibility. The mediator is an independent neutral party with no ties to the insurance company.
You can request mediation by contacting the Mediation Administrator as follows:
American Arbitration Association
Online: www.adr.org; or
Traditional Mail to: 1101 Laurel Oak Road, Suite 100, Voorhees, NJ 08043.
Once you submit your request for mediation to the Mediation Administrator, they will advise if your claim is eligible for mediation within 3 business days and will contact you to schedule your mediation conference. More details about the mediation process are available at www.adr.org or at the Department’s website www.dobi.nj.gov.
Policyholders may elect to participate in an insurer’s internal appeal process [or insurer mediation programs Note: insurers that do not offer a mediation program may delete this phrase] as well as the mediation program established by the Department.
If you have any questions about this letter, please contact us at [the name of a person who will handle questions at the insurance company and contact phone number]
[Insurance Company Information]