Gov announces insurance-related proposals for Puerto Rico
SAN JUAN – Puerto Rico Gov. Ricardo Rosselló announced Wednesday that he will implement various administrative initiatives and submit other proposals for the legislature’s consideration “to improve the response” of insurance companies with regard to their policyholders.
The governor said Hurricane Maria made evident that changes were needed to strengthen policyholder rights.
“By collecting the input of various sectors—including policyholders, insurers, businesses, the private sector, municipalities, and individuals—we have developed a series of initiatives to adjust the Insurance Code to the needs of a tropical Island subject to the recurring threat of atmospheric events,” the governor said in a written statement.
Rosselló commented that the initiatives, which emerged after a summit he convened on the matter a few weeks ago, “join and complement others that the Office of the Insurance Commissioner of Puerto Rico has already begun at the administrative level,” reads the news release issued by the governor’s office, La Fortaleza.
“We seek an insurance industry that possesses the necessary tools to respond diligently and promptly to the claims of the policyholders; as well as achieve a faster recovery of Puerto Rico after a catastrophe through the economic injection that the industry represents,” Commissioner Javier Rivera says in the release.
“In view of the constant indication of the delay in the payment of insurers due to disagreements as to the value of the damage or loss, it was recommended to incorporate a mandatory appraisal process through an arbitrator,” La Fortaleza wrote.
Through this process, either party may submit the matter to an arbitrator, with legislation establishing the appraisal process, “subject to the proviso that it will not replace or constitute a waiver of the right of the policyholder to initiate legal action.”
A proposal that, “in the event of a state of emergency,” partial or advanced payment to cover undisputed items be required was mentioned, as well as amending the Insurance Code to eliminate the period policyholders have to make an insurance claim.
Changes will be introduced that allow qualifying entities the placement of certain commercial risks” with surplus line insurers, or those that cover risks that are typically declined by other insurance carriers.
“In this way, certain entities could be exempted from the requirement to circulate the risk among insurers of the Island before turning to an insurer of surplus lines, which will result in greater access to more affordable premiums,” La Fortaleza wrote.
The governor also said the creation of “low-cost coverage with limited benefits, known as microinsurance, would be proposed. In case of a catastrophic event, this coverage would allow the policyholder to receive compensation without having to go through the claim adjustment processes,” which would facilitate access to coverage for “the low-income population.”
Another proposal: “A specialized courtroom with judges prepared to expeditiously view insurance cases for pending common legal disputes,” such as “the existence of coverage; the interpretation of the terms or conditions of the policy -including applicable limits-; the disagreement of the policyholder with the final resolution of the claim; and even amounts where the policyholder does not submit to the appraisal,” the release lists.
“Finally, for cases where the insurer has not proceeded in good faith or that the handling of the claim was unreasonable, a penalty would be established requiring the payment of all fees to the policyholder who had to go to court, as well as the payment of any damage or loss caused,” according to La Fortaleza.
The commissioner added that, with the measures, “we also seek to provide greater access to low-cost insurance coverage for commercial sectors, non-profit organizations, public agencies, and municipalities, which have been substantially impacted by increases in the cost of commercial property policy premiums, in order to expand commercial insurance options in the market.”