On May 22, 2014 Naragansett Bay Insurance Company (“Naragansett”) signed a Consent Order with the New York State Department of Financial Services (DFS) agreeing to pay a civil penalty of $327,400 and to enact substantial capacity upgrades for its failure to timely perform adjuster inspections on numerous properties damaged by Super Storm Sandy.1
Naragansett was found in violation of New York Insurance Law §2601, Insurance Regulation 64, and the Twelfth Amendment to Insurance Regulation 64, as a result of an investigation conducted by DFS. The company failed on numerous occasions to comply with Section 216.5(a)(1) of 11 NYCRR 216 (“Insurance Regulation 64”) which requires an insurer to commence investigation of a claim within fifteen (15) business days of receiving a notice of claim.
Naragansett received more than 10,000 Super Storm Sandy claims between October 26, 2012, and November 15, 2012, in an area covering the New York State counties of Bronx, Kings, Nassau, New York, Orange, Queens, Richmond, Rockland, Suffolk, and Westchester. These claims were dubbed “Sandy Claims”.
In order to assist with the proper handling of “Sandy Claims,” DFS issued the Twelfth Amendment to Insurance Regulation 64 which required the company to “commence an investigation” within the shorter of six (6) business days after November 29, 2012, or fifteen (15) business days of receiving notice of the claim for Sandy Claims filed between October 26, 2012, and November 29, 2012. For claims filed on or after November 29, 2012, the Twelfth Amendment required an investigation be commenced within six (6) business days of receiving notice of claim. This six (6) day period also applied to claims where Naragansett wanted to include an inspection of damaged or destroyed property.
Many of these claims where not timely adjusted or investigated resulting in violations of New York State Insurance Law and significant financial and personal hardship to the insureds. As a result, an investigation was conducted by DFS which led to the Consent Order.
In order to avoid a lawsuit, Naragansett agreed to enter into a Consent Order requiring it to implement substantial new procedures to insure it would be in a position to deal with the remaining, and any future, claims. These remedial measures include upgrading procedures for collecting, maintaining, and updating catastrophe data, claims handling, and capacity building. In addition, the above mentioned penalty of $327, 400 was agreed to by Naragansett and DFS.
Importantly, the Consent Order does not in any way preclude consumers affected by Naragansett’s defective claims handling procedures from pursuing any right or remedy available under the law, including bringing suit.
If you or someone you know initiated a claim resulting from Super Storm Sandy with Naragansett Bay Insurance Company or another carrier and believe the claim was not timely or properly investigated, it would be a good idea to consult with a professional regarding your rights and potential remedies.
1 Consent Order, New York State Department of Financial Services, Financial Frauds & Consumer Protection Division in the matter of Narragansett Bay Insurance Company.