New Jersey Requires Insurers to Inform Their Policyholders of New Mandatory Mediation Program for Post-Sandy Insurance Claims

The New Jersey Department of Banking and Insurance (“DOBI”) has implemented a mandatory mediation program for unsettled first-party Sandy-related insurance claims for individuals with homeowners, automobile and commercial insurance policies. According to the new program, insurers must provide written notice, on or before April 8, 2013, to policyholders with open and unresolved claims. The notice must inform policyholders of the program’s availability.

The DOBI issued a sample letter in Bulletin No. 13-08. The sample letter corrected a previously incorrect American Arbitration Association (AAA) fax number. The new number should be used to forward all mediation requests.

In Order No. A13-106 and Bulletin No.13-07, the DOBI outlined procedures and established the AAA as its mediation administrator.
Some notable features of the program include:

• Voluntary policyholder participation.
• Mandatory insurer participation.
• Payment of fees by the insurer.
• Notice of the availability of the mediation program for new or reopened Sandy claims.
• Notice must be provided in any offer of claim settlement or claim denial.
• Mediation conferences must be held within 30 days after receipt of a mediation request unless the parties agree to an extension.
• The DOBI and the AAA will establish mediation guidelines and provide additional information on the mediation program on the AAA’s website.
• Surplus lines insurers and risk retention groups can elect to participate in the mediation program, but only on a case-by-case basis.