Voluntary mediation offers speedy resolution when insurers and homeowners can’t agree
This from the governor’s press office – “Governor Andrew M. Cuomo today announced that the Department of Financial Services has established a voluntary mediation process for homeowners disputing their insurance claims or dissatisfied with denials of their claims arising from Storm Sandy.
“Mediation offers a speedy, low-cost resolution of insurance claims for homeowners who are unable to reach agreement with their homeowners’ insurance companies on claims from Storm Sandy,” Governor Cuomo said. “It is also much less expensive for insurers than litigation, so it’s a win for everyone.”
Superintendent of Financial Services Benjamin M. Lawsky said, “Most non-flood insurance claims have already been resolved by insurance companies. But we know from past storms that some claims are difficult to resolve. We also know that after other major storms, mediation was extremely successful in other states. So the Department of Financial Services has issued an emergency regulation directing insurers to offer and pay for voluntary mediation for open and denied insurance claims from Storm Sandy.”
Most non-flood insurance claims have already been resolved, and most of those unresolved are still in process. As of February 8, insurers representing 90 percent of the market in Sandy-affected areas reported to the Department that, with respect to all claims other than flood, they have received 432,000 claims and had fully resolved 87 percent. These insurers have paid $3.6 billion of the $4.6 billion that they expect to pay. With regard to residential property insurance, there have been 287,000 claims, and 94 percent have been fully resolved, with carriers paying $1.5 billion of the $1.7 billion that they expect to pay.
Under the new regulation, homeowners may seek mediation for claims that are disputed or if they disagree with the insurance company’s denial of a claim.
In the aftermath of Hurricanes Andrew, Katrina, and Rita, Florida, Mississippi and Louisiana instituted nonbinding mediation programs, administered by the American Arbitration Association, aimed at bringing prompt closure to disputed insurance claims.
Both consumers and insurers have found the programs beneficial. After Hurricane Andrew, a program sponsored by the Florida Department of Insurance handled 2,400 claims and achieved a settlement rate of 92 percent. In Louisiana, 15,000 cases were filed after Katrina, with a settlement rate of 74 percent. In Mississippi, 5,000 cases yielded settlements 82 percent of the time.
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