AIA Testifies on Sandy Claims Handling Process in New York
Gary Henning, Northeast region vice president for the American Insurance Association (AIA), testified about the industry’s response to Superstorm Sandy and the lessons learned at a hearing yesterday before the New York Assembly Standing Committee on Insurance.
AIA’s testimony emphasized the insurance industry’s remarkable performance in handling a record number of claims following the storm. AIA also noted that many consumers remain unaware of the differences between homeowners insurance and flood coverage. Finally, Henning cautioned the legislature against mandating unrealistic and counterproductive claims adjusting requirements.
“Insurers promptly responded to what was an unprecedented weather-related insurance event in New York’s history,” said Henning. “Insurers have rightfully been expected to play a major role in the recovery effort and AIA is proud that our industry as a whole has fulfilled its obligations with distinction.”
Insurers have responded to more than 500,000 filed claims and paid out over $5 billion to New York customers, with another $1 billion more in expected payments to be made. To date, 92 percent of received homeowners claims have been successfully closed with a claims complaint ratio of well under 1 percent according to the New York Department of Financial Services.
Many people remain unaware that a homeowners policy does not cover flood damage. This is despite the fact that there is already a notice required in every homeowners policy stating that the policy does not cover flood damage and that if the person wants flood coverage, he or she can obtain it separately.
“A major issue continues to be a lack of consumer awareness of what exactly is covered in a homeowners insurance policy,” said Henning. “Many people were not, and are not, aware that a homeowners policy does not cover flood damage. AIA has begun discussions with stakeholders on how to better educate consumers.”
Henning cautioned the legislature against enacting legislation mandating unrealistic claims adjusting requirements on the insurers. One legislative proposal would require all claims inspections to be conducted within six business days of the opening of a claim.
“Mandating that all claims must be inspected in six business days, if they are going to be inspected at all, would almost certainly divert resources from the most serious claims,” said Henning. “Unrealistic claims adjusting requirements could have unintended negative consequences for consumers. Insurers must be allowed to continue to use their years of experience in determining how to best serve all of their policyholders.”
At the end of the hearing, Henning reiterated the industry’s commitment to New York stating, “AIA stands ready to work with the legislature, the Department of Financial Services and all stakeholders in crafting appropriate solutions to better help policyholders.”