News & Updates

Hurricane Sandy: Critical Claims Handling Issues for Insurers November 7, 2012

The Achilles’ heel for many insurance companies when handling and processing claims involving catastrophes is the varying regulations contained in each state’s unfair insurance claims statutes. Failing to assess and implement proper procedures according to these statutes often creates extra-contractual exposure for insurers in ensuing coverage litigation.

The table below outlines the statutes relevant to those states affected by Hurricane Sandy, along with whether an insured has a private cause of action for such violations.

An early assessment is necessary to avoid claims of bad faith. Goldberg Segalla served as national counsel for major property insurers on issues relating to Hurricane Irene in 2011 and is well prepared to assist insurers with bad faith and coverage issues related to Hurricane Sandy.

For more information, please contact:

 

Unfair Claims Handling Statutes

State:

Unfair Claims Statute:

Private Right of Action:

Connecticut

Conn. Gen. Stat. §38a‑816 (2012).

No private right of action exists solely under the Connecticut Unfair Insurance Practices Act; however, the Connecticut courts have held that a private right of action exists under Connecticut Unfair Trade Practices Act, Conn. Gen. Stat. § 42-110a-110q, to enforce CUIPA violations, in the first party context only.

Massachusetts

ALM GL ch. 176D, § 3 (2012).

Massachusetts Consumer Protection Code, ALM GL ch. 93A, § 9, creates a limited private right of action in the first and third party context for violations of ch. 176D.

New Jersey

N.J. Stat. § 17:29B-4; §17B:30-13.1 (2012).

No private right of action.

New York

N.Y. CLS Ins. § 2601 (2012).

No private right of action.

Pennsylvania

40 P.S. § 1171.5 (2012).

No private right of action under 40 P.S. § 1171.5. However, Pennsylvania has a bad faith statute under 42 P.S. § 8371 that provides a private right of action to insureds but not third party claimants. It is unsettled whether violations of 40 P.S. § 1171.5 are relevant to proving bad faith. § 8371 provides: 

“In an action arising under an insurance policy, if the court finds that the insurer has acted in bad faith toward the insured, the court may take all of the following actions:

(1) Award interest on the amount of the claim from the date the claim was made by the insured in an amount equal to the prime rate of interest plus 3%.

(2) Award punitive damages against the insurer.

(3) Assess court costs and attorney fees against the insurer.”