New Jersey Governor Supports Policyholder Mediation for Hurricane Sandy Claims
In the wake of New Jersey Governor Chris Christie’s public announcement supporting mediation for resolution of insurance claims that resulted from hurricane Sandy, experts agree that the plan is a good one. Insurance companies are still dealing with millions of dollars in claims that are a result of the devastating hurricane that hit the East Coast in October of last year, prompting the governor’s suggestion for mediation as an alternative method of resolving the massive amount of claims that are still unresolved.
According to Attorney Donald Kiel of K&L Gates, it’s a great idea. Kiel represents many businesses in the Newark area that are still in the process of negotiating with their insurance companies over the hurricane’s damage. "It certainly would have the effect of saving policyholders money," Kiel said. "And it would take some of the negotiating power away from the insurance companies, who know that their policyholders have to pay lawyers to sue them, if it gets to that point."
When Governor’s proposed legislation goes through, insurance companies involved in Sandy claims will be required to participate in mediation as well as pay for the cost of it. However, for policyholders, participation will be voluntary. If the result of the mediation process isn’t satisfactory for the policyholder, they still retain their right to pursue litigation, if necessary, which is one of the primary benefits of the mediation process.
Hurricane Sandy was, for many insurers, the costliest, most significant natural event to strike in company history. Due to the extensive damage caused by the storm, many insurance companies were forced to increase their claims processing personnel to handle the volume of claims coming in. Even with these increases, some insurance companies have not been able to handle the volume of policyholder claims, thus prompting the possibility of a stream of legal disputes.
New York State has already set in place a similar program. In fact, the American Arbitration Association—the entity selected to handle New York’s cases—is also being considered as mediators for New Jersey’s claims.
According to a spokesman for the New Jersey Department of Banking and Insurance, Marshall McKnight, approximately 25,000 insurance claims that are currently in dispute are slated to go through the mediation program. He stated that currently, the state is accepting proposals from mediators who believe that they have the expertise necessary and manpower necessary to handle the scope of New Jersey policyholders’ claims. “There are a number of companies out there that have done this before,” he said. “We will be looking at whether they have the experience and whether or not they are large enough to handle the size of the program."