DFS Rule Hearing: Mediation Procedures for Disputed Personal Lines Claims Resolution

On Thursday, May 8, 2008, a member of this firm attended a public hearing by the Department of Financial Services (“DFS”) on Proposed Rule 69J-2.003, F.A.C. entitled “Mediation Procedures for Resolution of Disputed Personal Lines Insurance Claims Arising from the 2004 and 2005 Hurricanes and Tropical Storms.” The Proposed Rule defines terms used in the Rule and makes changes to the notice of right to mediate and procedures for requesting information.

Tom Valentine, DFS Assistant General Counsel, presided over the public hearing. He briefly reviewed the Rule and opened the hearing up for public testimony.

Insurance industry representatives raised several issues regarding the Proposed Rule. First, under the definition of “claim” in section 2(b) of the Proposed Rule, there were concerns that the section conflicts with exceptions provided in 627.7015(9), specifically, that claims do not include disputes not covered under the policy. The DFS officials noted that the statutes control the Proposed Rule.

There were concerns that the $500 limit does not apply to subsection (3)(a)(1) of the Rule regarding responsibilities of the insured. The DFS officials stated that the $500 limit is intended to apply.

In addition, concerns were expressed about subsection (3)(a)(4) regarding the requirement that insurers notify the insured of their right to mediate within 60 days of a reported hurricane loss in light of a 90-day statutory requirement to pay claims. The DFS officials noted that the 90-day statutory provision is related to claims payments and the 60-day requirement is for notice of mediation. However, DFS is going to reconsider that provision in light of the concerns raised.

There were also discussions as to whether one notice in connection with every claim, is acceptable. The DFS officials stated that one notice is sufficient. However, supplemental claims may require a new notice. In cases involving supplemental claims, the DFS officials noted that it would be a case of first impression and they are seeking comments as to the best practices.

Following public comments, the meeting was concluded. It was noted that the record will remain open until May 19, 2008 at 5:00 p.m. for any written comments. For your review, we have attached a copy of the Proposed Rule.

Should you have any questions or comments regarding the Proposed Rule, please feel free to contact this office.

 

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