On September 27, 2016, Commissioner of Insurance, Daniel R. Judson, issued three bulletins directed at all insurance companies “that sell property insurance policies in Massachusetts.” The purpose of the three bulletins as described in their first sentence is “the facilitating of a well-organized effective response to consumer needs following a natural or man-made disaster….”
Division will annually survey pre-disaster preparedness of selected insurers
The first of the Bulletins, 2016-10, entitled “Annual Pre-Disaster Preparedness Survey” introduces a new survey protocol under the Commissioner’s purported powers pursuant to G.L. 175, §4, to gather information.
The Division states that it will annually identify, “based on the amount of direct premiums written in Massachusetts as of December 31…” the insurers and insurer groups that will be required to respond to a survey on an annual basis.
The survey is designed to provide information to be used by the Division to:
- facilitate timely communications between the insurance industry, the Division and other state agencies concerning the value of insured damages within the state;
- enable the Division to determine whether or not supplemental insurance company monitoring activities, such as detailed data collection is appropriate; and
- assist with insurance company access to disaster affected areas in a timely and secure fashion.
As proposed in the bulletin, the Division will create a pre-disaster survey template with instructions for the completion and submission by the insurer groups and companies selected.
The bulletin states that the survey will be posted annually to the Division’s website on April 1 of each year. The companies selected to respond will then have until June 1 of that year to complete the survey to be used by the Division in preparing for potential disasters.
Second Bulletin, 2016-11, sets guidelines for emergency adjusters from out-of-state
The second Bulletin, 2016-11, entitled “Emergency Procedures for Insurers’ Adjusters of Property Insurance Claims Following a Natural or Man-Made Disaster” applies when a disaster may have occurred.
Bulletin 2016-11 applies to all property insurance companies and it sets up a protocol for property insurers in Massachusetts for importing property adjusters to assist from other states.
The Bulletin does not apply to “individuals who appraise the value of motor vehicle damage.” Under Massachusetts law, G.L. 26, §8G, the licensing of appraisers to appraise motor vehicle damage is the function of the Board of Auto Damage Appraisers Licensing which is part of the Division of Insurance but an independent board.
The Bulletin provides guidelines for such insurers using property adjusters from other states to assist insurers with Massachusetts property claims resulting from a disaster on an emergency basis. This rule provides that such adjusters:
- Must be employed by a non-public adjusting entity or a Massachusetts licensed insurer;
- Must be licensed in their home state;
- Must regularly adjust property claims if their home state does not license adjusters;
- Must only perform work for the hiring insurer;
However, such out-of-state property adjusters that qualify under the bulletin may adjust Massachusetts property insurance claims from within or without the state following a natural or man-made disaster.
The Bulletin also gives specific provisions for insurers giving insureds referrals for property repairs. Under these provisions:
- Insurers may only refer policyholders to service companies or contractors that are properly registered and licensed in Massachusetts.
- These contractors, when providing work on owner-occupied properties with four or less units, must be licensed as home improvement contractors by the Office of Consumer Affairs and Business Regulations.
- Additionally, insurers must provide licensed construction supervisors when performing work that is subject to the Massachusetts Department of Public Safety requirements.
These emergency procedures for the employment of out-of-state adjusters applies when an event is designated by the Division as “catastrophic.” This designation can be based upon discussions between the Division and the insurance industry or can be applied when any area of the state is declared to be a disaster area by the Governor or the President of the United States. Under Bulletin 2016-11, the Division reserves the right to post additional disaster recovery requirements as needed to its website.
Third bulletin to allow Division to gather post-disaster information
The final Bulletin, 2016-12, also issued on September 27, finishes out the trio with the provisions relating to “Post-Disaster Insured Damage Data Collection.” Again this Bulletin is issued to outline the criteria and procedures for the Division to obtain insured damage estimates following a natural or man‑made disaster.
The Division states that following the occurrence of such a disaster it will obtain initial estimates of insured damages via individual teleconferences with insurance company liaisons as identified in that company’s pre-disaster survey responses under the first Bulletin, Bulletin 2016-10.
The Division, under this Bulletin, reserves the right to obtain detailed data collection “when any area of the state is declared to be a disaster site by the Governor or the President.” It also reserves the right to demand this information in “other situations where the scale of damage warrants such additional information.” Again, this information is claimed to be collectible, according to the Commissioner, under GL.C. 175, §4.
The Division plans to follow up this Bulletin by posting the details regarding such potential teleconferences and the possible detailed data collection requirements for such disasters. The Bulletin indicates that the Division will not demand detailed data until at least “5 weeks following the occurrence of the event.”
Text of the three bulletins below
BULLETIN 2016-10 Annual Pre-Disaster Preparedness Survey
TO: Insurance Companies and Insurance Company Groups That Sell Property Insurance Policies in Massachusetts
FROM: Daniel R. Judson, Commissioner of Insurance
RE: Annual Pre-Disaster Preparedness Survey
DATE: September 27, 2016
______________________________________________________________________________
In the interest of facilitating a well-organized and effective response to consumer needs following a natural or man-made disaster, the Division of Insurance (“Division”) will annually collect and review pre-disaster survey information from insurers under the authority of M.G.L. c. 175, §4. Insurer groups that will be required to respond to the survey will be identified annually based on the amount of direct premium written in Massachusetts as of December 31 of the preceding calendar year for fire, allied lines, and homeowners multi-peril combined.
The information provided in this survey will be used by the Division to:
- facilitate timely communications between the insurance industry, the Division and other state agencies concerning the value of insured damages within the state;
- enable the Division to determine whether or not supplemental insurance company monitoring activities, such as detailed data collection is appropriate; and
- assist with insurance company access to disaster affected areas in a timely and secure fashion.
The pre-disaster survey template and instructions for its completion and submission, along with the insurer groups subject to the survey, will be posted annually to the Division’s website on April 1 of each year. Unless otherwise directed in the instructions posted to the website, insurer responses to the survey are due not later than June 1 of that year.
Bulletin 2016-11; Emergency Procedures for Insurers’ Adjusters of Property Insurance Claims Following a Natural or Man-Made Disaster; Issues September 27, 2016
By the Division of Insurance
BULLETIN 2016-11
TO: Insurance Companies and Insurance Company Groups That Sell Property Insurance Policies in Massachusetts
FROM: Daniel R. Judson, Commissioner of Insurance
RE: Emergency Procedures for Insurers’ Adjusters of Property Insurance Claims following a Natural or Man-Made Disaster
DATE: September 27, 2016
______________________________________________________________________________
In the interest of facilitating a well-organized and effective response to consumer needs following a natural or man-made disaster, the Division of Insurance (“Division”) issues this bulletin to advise property insurers in Massachusetts of procedures for property adjusters when handling Massachusetts property claims that result from a natural or man-made disaster. This bulletin does not apply to individuals who appraise the value of motor vehicle damage.
If property adjusters from other states are used to assist insurers with Massachusetts property claims on an emergency basis, they must be employed by a non-public adjusting entity or an insurer licensed in Massachusetts. They must also be licensed in their home state or regularly adjust property claims in a state that does not require an adjuster license, and they may only perform work for their hiring insurer. Property adjusters may adjust Massachusetts property insurance claims from within or outside the state following a natural or man-made disaster.
For the purpose of repairing damaged property, insurers may only refer policyholders to service companies or contractors that are properly registered and licensed in Massachusetts. The Massachusetts Office of Consumer Affairs and Business Regulations (OCABR) requires contractors to be registered as Home Improvement Contractors, as defined in G.L. c. 149A, when performing certain work. The Massachusetts Department of Public Safety (DPS) additionally requires contractors to be licensed as a Construction Supervisor when performing certain work. To determine if service companies or contractors meet these requirements, please consult the OCABR website or the DPS website.
When an event is designated by the Division as “catastrophic” based on early discussions with the industry, or any area of the state is declared to be in a state of disaster by the Governor of Massachusetts or the President of the United States, the Division may post additional disaster recovery requirements or direction for property adjusters to its website.
Bulletin 2016-12; Post-Disaster Insured Damage Data Collection; Issued September 27, 2016
By the Division of Insurance
BULLETIN 2016-12
TO: Insurance Companies and Insurance Company Groups That Sell Property or Motor Vehicle Insurance Policies in Massachusetts
FROM: Daniel R. Judson, Commissioner of Insurance
RE: Post-Disaster Insured Damage Data Collection
DATE: September 27, 2016
______________________________________________________________________________
This bulletin is issued to outline the criteria and procedures that the Division of Insurance (“Division”) will use for obtaining insured damage estimates following a natural or man-made disaster.
Following the occurrence of such an event, the Division will obtain initial estimates of insured damages via individual teleconferences with liaisons designated by insurance companies in their pre-disaster survey responses submitted in accordance with Bulletin 2016-10.
Detailed data collection may be pursued by the Division when any area of the state is declared to be a disaster site by the Governor of Massachusetts or the President of the United States, and in other situations where the scale of the damage warrants such additional information. The data collected pursuant to this bulletin will be collected under the authority of M.G.L. c. 175, §4.
Details regarding teleconferences and possible detailed data collection requirements will be posted on the Division’s website, and an e-mail from the account of MADOICATData@state.ma.us will be sent to all individuals designated by insurance companies in their pre-disaster survey responses when such website postings are made. Requests for detailed data will be issued at least five weeks following the occurrence of the event.