NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A1092A
SPONSOR: Skoufis TITLE OF BILL: An act to amend the insurance law, in relation to
standards for prompt investigation and settlement of claims arising from
states of emergency
PURPOSE OR GENERAL IDEA OF BILL: The purpose of this bill is to
establish claim investigation and settlement standards for insurance
companies to follow in the event of a disaster.
SUMMARY OF SPECIFIC PROVISIONS: This bill would require every insurer
authorized to writes policies in New York State that cover loss or
damage to real property, personal property, or other liabilities for
loss of, damage to, or injury to persons or property to begin investi-
gating a claim arising from a declared disaster or emergency and inform
the insured of all items, statements, and forms that the insurer
believed will be required of the claimant in accordance with regulations
promulgated by. the Superintendent of Financial Services. If the insurer
wishes the investigation to include an inspection of damaged or
destroyed property, such inspection would have to occur in accordance
with regulations promulgated by the Superintendent. In addition, insur-
ers would have to allow claimants to make certain repairs necessary to
protect health and safety and to accept an alternative proof of loss
from the claimant.
Within fifteen business days after receiving all the items, statements,
and forms that the insurer required from the claimant, the insurer would
be required to advise the claimant in writing whether the insurer has
accepted or rejected the claim. An insurer would be allowed a one-time
extension of fifteen additional business days to continue its investi-
gation, provided that the insurer notifies the claimant of the reasons
additional time is needed for the investigation.
If the insurer has accepted the claim, the claimant would have to be
notified of the amount the insurer is offering to settle the claim and
of all applicable policy provisions regarding the claimant's right to
reject and appeal the insurer's offer. If the insurer rejects the claim,
the insurer would have to inform the claimant of all applicable policy
provisions regarding the claimant's right to appeal the decision.
An insurer would be required to pay the claim not later than three busi-
ness days from the settlement of the claim.
JUSTIFICATION: When a disaster or emergency strikes, policyholders
frequently rely on their insurance policies to be made whole again.
Insurance payouts are often necessary for homeowners and businesses to
make repairs or to replace damaged property. In addition, repairs often
need to be made quickly in order to ensure the health and safety of the
policyholders and the community. Moreover, a delay in insurance payments
can result in a delay in FEMA assistance, as FEMA will not provide
payment for damages until insurance claims are fully processed.
Following Superstorm Sandy and Tropical Storms Irene and Lee, it was
found that there were often lengthy delays in the time it was taking
insurance companies to investigate and process claims and make payments
to policyholders. Following Sandy, the Department of Financial Services
found it necessary to issue an emergency regulation that required insur-
ers to begin an investigation within 6 business days of receiving a
Sandy-related claim; if the insurer sought an inspection of the damaged
property, the inspection would have to be performed within those 6 busi-
ness days.
This bill would address this issue by requiring insurers to respond to a
claim arising from a disaster or emergency in accordance with regu-
lations established by the Superintendent of Financial Services, accept
or reject a claim within fifteen business days of closing the investi-
gation, and pay a claim within three business days of the claim being
settled.
PRIOR LEGISLATIVE HISTORY: New bill.
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: None.
EFFECTIVE DATE: Immediately.
