Insurance Claim Mediation
New York and New Jersey Announce Mediation Program for Superstorm Sandy Related Insurance Claims
McCarter & English, LLP
March 1, 2013
On February 25, 2013, New York Governor Andrew Cuomo and New Jersey Governor Chris Christie separately announced their respective states were setting up voluntary mediation programs to help resolve disputed Superstorm Sandy insurance claims. Insurers will foot the bill for both programs, offering policyholders what may be an attractive alternative to costly and time-consuming litigation. The New York and New Jersey programs will draw from similar mediation programs in Florida, Mississippi and Louisiana that proved successful after Hurricanes Andrew, Katrina and Rita.
New York
New York’s mediation program will handle open and disputed Sandy-related real and personal property insurance claims occurring in Bronx, Kings, Nassau, New York, Orange, Queens, Richmond, Rockland, Suffolk and Westchester counties. The program, established by the New York Department of Financial Services’ (DFS) emergency amendment to Insurance Regulation 64, will not include automobile or flood insurance claims. Insurers must notify policyholders within strict time frames of their right to commence mediation under the program.
New York’s mediation program will be administered by the American Arbitration Association (AAA) under the supervision of and pursuant to procedures and standards approved by the DFS. Participating insurers will fully fund the program and directly pay all of the AAA’s fees for the program. The parties and the AAA can agree to conduct the mediation in person or by telephone or videoconference. The program explicitly requires insurers to participate in "good faith."
The mediation is nonbinding and will not deprive policyholders of their other legal remedies, including the right to appraisal and to bring civil litigation.
New Jersey
New Jersey’s mediation program will permit policyholders to submit disputed homeowner’s, automobile and commercial property claims to a mediator who will facilitate settlement discussions. Eligibility for the program will be limited to disputed claims where there is no reasonable suspicion of fraud that are worth more than $1,000, and which are or were made under policies in force at the time Sandy made landfall. At this time, the program will not include disputed claims under flood insurance policies, as they are handled through the federal National Flood Insurance Program. The New Jersey Department of Banking and Insurance (DOBI) is exploring, however, the possible future expansion of the program to include disputed flood insurance claims.
All insurance carriers authorized and admitted to conduct business in New Jersey and the New Jersey Insurance Underwriting Association are obligated to participate in the program. Surplus lines insurers and risk retention groups will have the option to participate on a case-by-case basis. State-regulated carriers will be required to advise their policyholders with unresolved claims of the availability of the mediation program. While costs for the mediators will be borne entirely by the participating insurers, policyholders are responsible for their own attorneys' fees.
The program is being established by DOBI, and it is accepting proposals until March 7 from companies seeking to provide mediation services. DOBI anticipates the program may handle between 20,000 and 25,000 disputed claims, so the company selected must be experienced in the administration of voluminous claims. DOBI expects the program to be up and running by early April. Additional details and information about the program is expected to be released in the next few weeks.
SOURCE: www.jdsupra.com/legalnews/new-york-and-new-jersey-announce-mediati-37758/