Superstorm Sandy: NJ Bulletin Warns Public Adjusters on Reasonable Fees; NY Continues Moratorium on Certain Insurance Law Provisions; US House of Representatives Declines to Vote on $60 Billion in Disaster Aid

January 3, 2013

Author: Thomas F. Quinn

NJ Bulletin on Fees
In response to consumer complaints that public adjusters have been charging excessive fees, the New Jersey Department of Banking and Insurance (NJDOBI) issued a bulletin on December 20, 2012, cautioning public adjusters to keep their fees reasonable and in line with industry practice.

The NJDOBI has issued a bulletin to all public adjusters informing them that the fees they charge must be reasonable in relation to the service provided. The bulletin is a reaction to consumer complaints that adjusters are charging excessive fees, sometimes as high as 50 percent of the amount of the claim. This high percentage is in sharp contrast to the typical fee, which is 10 to 15 percent of the amount recovered by the insured. The NJDOBI stated that it does not anticipate a need for a departure from this normal fee scale for Superstorm Sandy claims. By law, public adjusters must itemize the services they provide. The bulletin states that adjusters should retain detailed records demonstrating the hours worked and actions taken on each claim in order to establish the “reasonableness” of the fee. Additionally, the bulletin cautions public adjusters that the NJDOBI will scrutinize the fees that they charge, particularly fees that appear excessive. The NJDOBI also reminds adjusters that if it finds a fee to be unreasonable, the adjuster’s license can be terminated and/or the adjuster can be subject to fines.

NY Extends Moratorium
To provide further relief to consumers impacted by Sandy, the New York Department of Financial Services (NYDFS) has extended the moratorium on certain insurance law provisions until January 6, 2013.The NYDFS issued its Third Amended Order regarding the Suspension of Certain Insurance and Banking Law Provisions. Specifically, effective December 16, 2012, the moratorium prohibiting the termination, cancellation or non-renewal of any covered policy has been extended for an additional twenty one (21) days. Also, the moratorium that automatically suspended the enforcement of policy renewal provisions is similarly extended. As a result, the moratorium with respect to these provisions, which began on October 26, 2012, has been extended until January 6, 2013.

Governor Cuomo’s Executive Order dated November 20, 2012, suspending certain deadlines applicable to the NYDFS related to the review or approval of certain transactions and other filings remains in effect. (See Superstorm Sandy: Further Implications for Related Party and Other Transactions Requiring Prior Approval and Scheduled to Close at Year-End.)

Disaster Aid Bill

The United States House of Representatives adjourned without voting on the $60 billion Disaster Aid package that would have provided relief to the storm-ravaged states of New York, New Jersey and Connecticut, among others. The House plans to take up the bill sometime during the next congressional session, which begins on Thursday, January 4, 2013. The Senate passed a $60 billion Disaster Relief initiative on December 28, 2012. Many representatives from states impacted by the storm were outraged over the House’s failure to approve the bill.

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