FPJL Announces Passage of Bill to Help Curb Bad Faith Insurance Practices Post-Maria

Picture1
We are excited to announce that on Tuesday, the Governor of Puerto Rico, Ricardo Rosselló, signed six bills into law that seek to grant justice to the island’s policyholders as thousands of claims remain unresolved more than a year after Hurricane Maria. Gov. Rosselló says the new measures are designed to expand coverage options for the island’s policyholders and correct an imbalance in favor of insurance companies, who generally have a considerable advantage over insureds in terms of bargaining power. The new laws come a year after Maria made landfall on the island as a Category 4 storm, causing an estimated $100 billion in damage. For nearly 6 months, the attorneys at FPJL have been working non-stop to curb the abuse and unfair practices of the insurance industry in Puerto Rico. The passage of PC 1645, creates a new statutory bad faith action for policyholders who feel their insurer is failing to settle a claim in good faith when the insurer could and should have done so.

Puerto Rico’s new bad faith law requires an insured to provide the insurer with written notice of any alleged violations at least 60 days prior to bringing a bad faith action against the insurer. The written notice is to include specific information such as: the name of the insurance company that the insured claims is acting in bad faith, a reference to the statutory provision which is alleged to have been violated; and the facts and circumstances giving rise to the violation. The new law also applies to all types of insurance including: accident, health, auto, as well as residential and commercial property insurance.

Other Changes Under the Law

PS 1054 provides a more efficient and cost-effective way for policyholders to obtain resolution of their claims via non-binding mediation. However, if a policyholder opts to resolve their claim via mediation, they do not give up their right to later pursue litigation over their claim.

PS 1056 is intended to expedite payments to policyholders during a state of emergency. The new law requires insurers to issue partial payments on any undisputed loss within ten days after the policyholder agrees to the insurer’s offer.

PS 1058 requires each insurer to prepare a written response plan for emergencies or catastrophic events to “guarantee the continuation of their services and operations in the event of a disaster. The plan must be certified annually by the Office of the Insurance Commissioner.

PC 1729 is one of two laws aimed at expanding the number of low-cost insurance products available to low-income policyholders. PC 1729 makes low-cost “micro-insurance” available for the first time on the island. In the event of a catastrophic event, policyholders will receive a predetermined amount of compensation for their loss without having to go through the adjustment process.

PC 1727 allows certain commercial entities to use surplus lines, with authorized insurers from other jurisdictions, after their request for coverage is fully or partially denied three times.

We would like to thank the Governor, Congress & Senate for pushing this bill through swiftly and giving a strong voice to the people. Bad faith claims can be quite challenging to litigate, particularly if you intend to secure an award of punitive damages. Given the inherent complexity of bad faith litigation, it’s important that you seek the assistance of a team of attorneys that has experience successfully recovering damages in bad faith disputes on behalf of policyholders.