New York State Department of Financial Services Issues Emergency Claims-Handling Rules for Claims Resulting from “Riot or Civil Commotion”
Knowledge

New York State Department of Financial Services Issues Emergency Claims-Handling Rules for Claims Resulting from “Riot or Civil Commotion”

Key Takeaways

  • The New York State Superintendent of Financial Services issued an emergency amendment to New York’s Unfair Claims Handling Regulation in the wake of recent protests across the state

  • The amendment aims to accelerate payment and resolution of claims filed after May 30, 2020 related to damages as a result of “riot or civil commotion,” including looting

  • The detailed emergency measures provide shortened time-frames for claim adjustment, additional requirements for delays in investigation, and a requirement for insurers to provide a detailed report to the Department of Financial Services for any claim that is not accepted or denied within 15 days

On June 4, 2020, and announced via press release on June 5, 2020, the New York State Superintendent of Financial Services issued an emergency amendment to New York’s Unfair Claims Handling Regulation, Regulation 64 (11 NYCRR 216), to accelerate payment and resolution of claims by individuals and businesses who suffered damages as a result of looting.

The emergency measures are detailed, and provide shortened time-frames for claim adjustment, additional requirements for delays in investigation, and a requirement for insurers to provide a detailed report to the Department of Financial Services (DFS) for any claim that is not accepted or denied within 15 days. It also adds a required mediation option for individuals and small businesses, at the insurer’s expense, and provides “good faith” rules for the conduct of mediation.

The Seventeenth Amendment to 11 NYCRR 216 (Regulation 64) applies to any claim filed after May 30, 2020 for loss or damage to property or injury to persons as a result of looting. The amendment:

  • Provides that insurers have six days from receipt of a claim or to June 5, 2020, whichever is later, to commence an investigation
  • Requires insurers to provide claimants or their representatives with a written notice of all items the insurer believes will be required to adjust the claim within six days of receipt of the claim or by June 5, 2020
  • Allows notice to the insurer’s agent to start time-frame
  • Allows insureds to undertake repairs, and provide proof of loss through video or photographs, where necessary
  • Requires insurers to pay the claim or advise the insured that more time is needed to investigate within 15 days of receipt of a proof of loss, with follow-up letters sent every 30 days (vs. 90 days)
  • Requires insurers to provide specific reasons and explanations for the delay in investigation
  • Requires insurers to provide a detailed report to the DFS in every instance where the claim was not accepted or denied within 15 days of receipt of the proof of loss
  • Requires insurers to advise the insured of the right to mediation and provide instructions regarding how to seek mediation, if the insured is an individual or small business, where a claim is denied, disputed, or unresolved after 45 days (insurers are not required to attend mediations where there is suspected fraud, the dispute has been submitted to appraisal, or civil litigation has been filed)
  • Requires mediation to be conducted by entities authorized by the DFS, and subject to terms established by the DFS, including requiring insurers to forward any request for mediation to the mediator within three days, and pay for the mediation within five days of receiving a bill
  • Sets forth “good faith” requirements for mediation, which provide that the insurer:
    • Must appear by knowledgeable representative with authority
    • Must bring policy, entire claims file, and all correspondence
    • May not “continuously disrupt” or become unduly argumentative or adversarial

However, with regard to the “good faith” requirements, it is important to note that “[a]n insurer that does not alter its original decision on the claim is not, on that basis alone, failing to act in good faith if it provides a reasonable explanation for its action.”

Insurers handling these types of claims must remain cognizant of the ever-changing landscape as it pertains to claims handling requirements, particularly during the ongoing COVID-19 pandemic, to ensure compliance.

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