May 12, 1992

SUBJECT: INSURANCE

Circular Letter No. 4 (1992)

WITHDRAWN

TO: ALL MOTOR VEHICLE SELF-INSURERS AND INSURERS LICENSED TO WRITE MOTOR VEHICLE INSURANCE IN NEW YORK

(1) UNPAID NO-FAULT CONCILIATIONS AND ARBITRATION AWARDS

It has come to the Department's attention that a number of insurers may not be in compliance with the arbitration procedures promulgated to resolve No-Fault automobile insurance claims disputes pursuant to Section 5106 of the New York Insurance Law. Regulation 68, Sections 65.17 and 65.18. sets forth these procedures and details insurers' responsibilities during the conciliation phase as well as during the arbitration process.

Specifically, Section 65.17(b)(2) of Regulation 68 requires that each claims office used by an insurer must designate a responsible staff member to act as a liaison whom the Department can contact to determine whether a No-Fault dispute submitted to the Department can be resolved without the need to proceed through arbitration. Too frequently, the Department's examiners are unable to achieve meaningful contact with claim personnel or insurers do not designate responsible supervisory personnel who will expend the effort to review the merits of the dispute. As a result, too many cases proceed to the arbitration stage wherein company counsel and the applicant then agree to a settlement which turns out to be substantially what the applicant claimed when the arbitration was initiated.

When claims are settled in this manner, apparently valid claims are unnecessarily delayed which, in addition to being deemed an unfair claims settlement practice, results in unnecessary expenses for insurers in the form of counsel fees and added administrative costs. Pursuant to Section 308 of the Insurance Law, you are directed to review the performance of the staff members you currently have designated to communicate with our Department and provide us with an updated list of staff members who are able to resolve disputes. In addition, a senior level claims officer must be designated to respond to the Department in the event that the communication between the Department and a designated staff member is unsatisfactory.

The Department has also received a number of complaints from applicants and applicants attorneys that No-Fault conciliation or arbitration awards are not being paid timely.

If a case is submitted to the Department for arbitration and an applicant prevails in whole or in part, either through conciliation or arbitration, the amount of settlement or award must be paid promptly. Insurers are required to pay all arbitration awards which are not appealed to a master arbitrator within 30 calendar days of the date of the mailing of the award. Master arbitration awards must be paid within 21 calendar days of the mailing of the award. Awards need not be confirmed into judgment. If an award is not paid in a timely manner, a complaint may be presented to the Department, and the Claims Administration Unit of the Property and Casualty Bureau will enforce the award. Interest continues to accrue at 2% compounded monthly until an award is paid and, if payment is not made by the insurer, in accordance with the conciliation letter or the arbitration award within 30 days of resolution, an additional attorney's fee of $ 60 may be claimed.

Accordingly, effective immediately, with every request for enforcement, the Department will require insurers to either provide proof to the Department that full payment was made or an explanation why payment was not made. In order to obtain strict compliance with the time requirements of Regulation 68 and pursuant to Section 109(c)(1) of the Insurance Law, a penalty will be imposed on insurers for each complaint made where no justifiable reason was furnished to the Department explaining why the arbitration award or conciliation agreement was not paid timely. Furthermore, these complaints will be recorded for the purpose of calculating the complaint ratios that form the basis of our annual complaint ranking.

(2) CHANGE IN CENTRAL REPORTING ORGANIZATION FOR TOTAL LOSSES

Insurers should also note that effective, January 1, 1992, the National Automobile Theft Bureau (NATB), which had been designated as the central organization for insurers to report certain motor vehicle claims, merged with the Insurance Crime Prevention Institute (ICPI) to form a new organization, the National Insurance Crime Bureau (NICB). Accordingly, all insurers licensed to write automobile physical damage insurance in this State must be members of the NICB. Where Regulation 64 requires insurers to make reports to the NATB, those reports should now be made to the NICB.

Acknowledgement of receipt of this Circular Letter No. 4 (1992), together with specification of the name, address and direct telephone number of the designated staff members, should be made in writing by the insurer's senior claim officer, no later than June 1, 1992. This information should be sent to Joseph Smeragliuolo, Associate Examiner, Property & Casualty Bureau, 160 West Broadway, New York, N.Y. 10013. Please direct any questions concerning this Circular Letter to Mr. Smeragliuolo at (212) 602-0338.

Very truly yours,

SALVATORE R. CURIALE

SUPERINTENDENT OF INSURANCE