N.Y. Orders Narragansett Bay Insurance to Pay $327,400 Fine

May 29, 2014

New York Gov. Andrew Cuomo’s administration announced today that Narragansett Bay Insurance Company will pay a $327,400 penalty for failing to perform timely inspections of Superstorm Sandy damage claims as required by New York Insurance Law and regulations.

The company’s violations were uncovered as part of a New York State Department of Financial Services (DFS) investigation.

“When a natural disaster like Superstorm Sandy strikes, insurers must respond rapidly to help their policyholders recover and rebuild,” Gov. Cuomo said in a statement.

“Delays can be devastating in the aftermath of an emergency, and as we prepare for the new reality of extreme weather it is imperative that insurers are swiftly reviewing and paying claims,” Gov. Cuomo said. “This administration will continue to hold insurance companies to the highest standards of service for the New Yorkers they support.”

DFS Superintendent Benjamin Lawsky said: “When an insurance company drags its feet, that can leave a homeowner or business in a crushing limbo. New Yorkers expect and deserve better. Insurers must stand ready and able to get policyholders back on their feet as quickly as possible during a disaster.”

DFS said its investigation uncovered that Narragansett failed in numerous instances to perform adjuster inspections of damage related to Sandy in the time frames required by law and regulation.

The agreement with DFS also stipulates that Narragansett must, within 60 days, improve its systems and procedures to ensure that it can successfully process New York policyholders’ catastrophe claims within the legally required time frames.

DFS said the department initiated its investigation into Narragansett in 2013 after policyholders complained of being unable to reach adjusters, as well as adjusters failing to show up to scheduled appointments for which policyholders had often already waited weeks.

Insurer’s Response

[The insurer's response has been updated on June 5. Narragansett on May 29 originally issued a statement saying it does not agree with the findings of the DFS. On June 4, the company issued a revised statement saying it has admitted to violations per the related consent order but that it did not agree with all of the findings from the DFS investigation. The article has been updated to reflect the company's new statement.]

In response to the DFS announcement, Narragansett issued a statement saying the company has been cooperative and forthcoming with the DFS investigation into insurance claims complaints resulting from Sandy.

Narragansett said it has admitted to violations per the related consent order but that the company did not agree with all of the findings from the DFS investigation.

Narragansett also said that having reached an agreement with DFS, the insurer feels it is important to highlight the following points:

• The company said it was not cited for incorrectly denying, delaying payment, or underpaying any claims. More than 95 percent of the claims filed were closed within 120 days. Narragansett said the Independent Insurance Agents and Brokers of New York had recognized Narragansett for “having performed extremely well” post-Sandy.

• The company said that in handling more than 20,000 claims related to Sandy, only 244 complaints were indicated on the New York DFS website. Furthermore, the company said 67 of those complaints were specifically related to flood coverage and that Narragansett does not provide or write flood insurance coverage.

• There are no ongoing regulatory reviews in any other states, including New Jersey, which was similarly impacted by Sandy. Narragansett said it currently provides insurance coverage to nearly 150,000 families in New York, New Jersey, Massachusetts, and Rhode Island.

 

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