Narragansett Bay Insurance Company Ordered to Pay $327,400 Fine

Narragansett Bay Insurance Company (NBIC) was ordered to pay a $327,400 penalty for failing to perform timely inspections of Superstorm Sandy damage claims as required by New York Insurance Law and regulations.

The company’s violations were uncovered as part of a New York State Department of Financial Services (DFS) investigation.

DFS initiated its investigation into NBIC in 2013 after policyholders complained of being unable to reach adjusters, as well as adjusters failing to show up to scheduled appointments.

The DFS investigation uncovered numerous instances where adjuster inspections of damage related to Superstorm Sandy were not performed in the time frames required by law and regulation.

The agreement with DFS also stipulates the company must, within 60 days, improve its systems and procedures to ensure that it can successfully process policyholders’ catastrophe claims within the legally required time frames. The agreement, made public, requires NBIC to commit to the following:

1. Improve systems and procedures to adequately respond to a catastrophe that produces up to 30,000 claims.
2. Obtain commitments from local vendors to handle the 30,000 claims.
3. Establish a plan to secure vehicle certificates so that adjusters can access restricted and damaged areas post-catastrophe.
4. Implement a plan to secure state emergency licenses for independent adjusters as needed.
5. Enhance company claim system to allow automated extraction of catastrophe claims related to a designated event and automatic assignment of the claims to a vendor for distribution to independent adjusting partners who can dispatch adjusters based on zip code.
6. Implement rules for adjusters to follow post-assignment, including instructions for contacting an insured, confirming the facts of the loss and providing an estimated time for inspection.
7. Improve its telephone systems and call center so that it can handle in excess of 500 calls per hour, review current third party call centers and establish procedures for catastrophe call handling, provide catastrophe training to call center personnel, and update call center training to include frequently asked questions to allow first call issue resolution.
8. Test functionality and capacity for all disaster recovery communications media.
9. Maintain a secure space with essential equipment and office supplies dedicated to catastrophe use.
10. Improve reporting to monitor claims performance during a catastrophe.
11. Implement procedures for collecting, maintaining and updating catastrophe claims data to allow efficient reporting of casastrophe claims processing date to the DFS.

NBIC responded to the announcement by Gov. Cuomo’s announcement by issuing a statement indicating that while it did not agree with the DFS findings, it found it to be in the best interest of the company to accept their conclusion.

NBIC further stated that it was not cited for incorrectly denying, delaying payment or underpaying any claims indicating that “More than 95 percent of the claims filed were closed within 120 days.”

In addition, the statement indicated of the more than 20,000 claims related to Superstorm Sandy the company handled, only 244 complaints were reported to DFS. In addition, 67 of those complaints were specifically related to flood coverage. The company stated it does not provide or write flood insurance coverage.

Sources: New York DFS and NBIC