Two of the insurers being investigated by the New York Department of Financial Services over Hurricane Sandy The investigation of Narragansett Bay Insurance Co., Tower Insurance Co. and Kingstone Insurance Co. is in reaction to complaints that the companies have failed to send adjusters and process claims in a timely fashion, and because homeowners have found the companies agents difficult to contact, Gov. Andrew Cuomo said in a written statement.
The announcement caught Nick Steffey, founder of Narragansett Bay Insurance, off guard. We were surprised because of how hard we've been working with the department and how seriously we take what we do, Steffey told Bests News Service. He said his company takes the states action seriously and will continue to work with the DFS.
Tower Group Cos. issued a written statement that said the company had received a letter from DFS citing claims-handling violations and addressed its concerns. We were surprised and disappointed to see that the governor's office repeated the same allegations in his Feb. 21 press release without any acknowledgement that Tower complied with the DFS requests with information that fully refutes the allegations contained in the DFS original inquiry, Towers statement said.
Cuomos statement said Narragansett policyholders complain they either cannot reach adjusters, or find they either do not show for scheduled appointments or the appointments are canceled with little notice. But the states own statistics show that Narragansett Bay had closed 95% of the 11,029 Sandy claims filed statewide and that the company had a complaint ratio of less than 1.5%, Steffey said.
Narragansett Bay, a specialty homeowners insurer operating in New York, New Jersey, Massachusetts and Rhode Island, carries $172 million in premiums.
Cuomo said complaints about Tower Insurance indicate the company has been operating in a pattern of not sending adjusters to inspect damaged properties. Customers in New York either had difficulty scheduling inspections with Tower representatives, or had claims denied during phone calls without an adjuster visit. Several complaints from Tower customers indicate that representatives were difficult to reach; the company has delayed processing claims; and that claims under a sewer backup endorsement have been improperly denied.
But Tower Insurance and its affiliated entities said they have closed more than 95% of Sandy automobile and homeowner claims and paid out more than $160 million in claims to businesses and individuals.
The DFS has sent the companies Insurance Law Section 308 letters, a legally binding information request to which companies are required to respond.
Insurers in New York are required to inspect damaged properties no more than 15 days after claims are filed, although in some Sandy-related claims the time was cut to six business days. Insurers must decide on claims within 15 business days after completing an investigation. If they cannot meet the deadline, they must explain why in writing to homeowners. DFS is asking insurers for information on how many extension letters they are sending, why the extensions are needed and how long the companies need to complete work on extended claims.
Cuomos announcement said complaints against Kingstone concern the company's failing to send adjustors, or to send them in a timely fashion. Complaints also allege adjusters would inspect only part of the property. The company has denied wind damage claims, disputed settlement amounts and delayed settlement, Cuomos statement said.
Attempts to gain comment from Kingstone were not immediately successful.
Kingstone Insurance, based in Kingston, N.Y., currently has a Bests Financial Strength Rating of B+ (Good). Tower Insurance Company of New York, based in New York City, currently has a Bests Financial Strength Rating of A- (Excellent). The Pawtucket, R.I.-based Narragansett Bay Insurance Co. is not rated by A.M. Best.
Complaints about Sandy claims have not been restricted to either New York state or private insurers. The New Jersey congressional delegation and Gov. Chris Christie are asking the National Flood Insurance Program to speed its responses to flood claims resulting from Sandy. In a recent letter to the Federal Emergency Management Agency, the delegation describes NFIP's response as unacceptable, as only 30% of program claims filed by state residents have been resolved. Christie cited statistics that showed private insurers, by contrast, resolved more than 85% of Sandy-related homeowners' claims, while NFIP had more than 70% of its claims still outstanding.