In Connecticut, the state’s insurance department now has the legal authority to establish a mediation program for claims disputes arising from catastrophic losses.
The state’s Public Act 13-148 — which was signed into law by Connecticut Gov. Dannel Malloy in June — went into effect on Oct. 1.
The law allows the state’s insurance department to establish a statewide program to mediate disputes between insureds and carriers to settle certain claims that involve losses from catastrophic events for which the governor has declared a state of emergency.
The program would apply to claims involving: personal risk insurance policies, other than private passenger nonfleet auto insurance; condominium association master policies; or condominium unit owners’ association property insurance policies.
The program, however, would not apply to flood insurance policies from the National Flood Insurance Program.
The program would address disputes where the difference between the parties’ positions on the actual cash value or amount of the loss is $5,000 or more, notwithstanding any applicable deductible. The parties may agree to mediate a dispute involving a smaller amount.
The law requires the commissioner to designate an entity to implement the program and specifies the conditions an entity must meet to be designated. The mediation must be conducted in accordance with procedures the entity establishes and the insurance commissioner approves.
The law stipulates that all insurers licensed to provide insurance for the affected lines must participate in the program. The insurer must pay a mediation fee to the designated mediation entity within 10 business days after it receives an invoice for the mediation from the entity. The insurer is not responsible for any cost incurred by an insured, including costs for advisors, representatives, attorneys, or public adjusters.
The law allows the commissioner to adopt implementing regulations and specifies what they must contain.
Connecticut’s Public Act 13-148 also says an insured’s right to request mediation does not affect any other right the insured may have to redress the dispute after completing the mediation, including any remedies specified in the insurance policy or any right provided by law. However, if the insured and the insurer settle the case and the insured does not rescind his or her agreement, this provision does not apply.
Also starting this month, some new requirements concerning public adjuster contracts are taking effect.
According to Connecticut’s Public Act No. 13-138, which went into effect on Oct. 1, the use of an employment contract between a public adjuster and the insured shall be mandatory — and any such contract signed on or after Oct. 1, 2013, would be required to contain a provision regarding terms of the cancellation of the contract, prominently displayed on the first page of the contract in not less than 12-point boldface type.
The provision would specify that the insured may cancel the contract, provided that the insured notifies the public adjuster at the main office or branch office at the address shown in the contract, by certified mail with return receipt requested, posted within four business days after signing the contract.