State Insurance Regulators Ask Insurers to Extend Deadlines Following Storm

On December 3, 2007, a major storm caused flooding, mudslides, and other problems across Western Washington and Oregon. Insurance regulators in Washington and Oregon have responded with efforts to ease the burden on affected insurance consumers.

Yesterday, December 19, 2007, Washington Insurance Commissioner Mike Kreidler issued a
notice asking that "all regulated entities issuing a contract of insurance in the affected areas voluntarily extend any time limit placed on an insured to perform any act or transmit information or funds to January 10, 2008." The "affected areas" include Grays Harbor, Lewis, Mason, Pacific, and Thurston counties, which were recently declared federal disaster areas by FEMA. Kreidler specifically requested that insurers "withdraw and reissue any notice or cancellation mailed one week prior to December 3, 2007 and not issue any new policy cancellations or non-renewals" in these counties.

Update: In response to requests for clarification from the industry, the OIC has narrowed its request to specific zip codes in the "affected areas." The following additional counties are included: Clallam, Jefferson, King, Kitsap, Skagit, Snohomish, and Wahkiakum.

In a
press release by the Office of the Insurance Commissioner (OIC), Kreidler was quoted as saying, “I believe that this will help provide some small measure of comfort and peace of mind during the early recovery process, and help ensure that these winter storm victims do not lose insurance coverage during the time they need it most.” Kreidler cited concerns about "widespread disruption of mail, energy, transportation and basic communication services."

The OIC press release explains that "[t]he Insurance Commissioner's plea is a call for voluntary cooperation since he has no authority to order such relief." Oregon's insurance regulator, the Insurance Division of the Department of Consumer and Business Services, does not construe its authority so narrowly.

On December 7, 2007, the Insurance Division entered a mandatory emergency order that provides (among other things, and with certain exceptions), "As to any policy provision, notice, correspondence, or law that imposed a time limit upon an insured to perform any act or to transmit information or funds with respect to a contract of insurance, which act was to have been performed on or after December 3, 2007, the time limit shall be extended to January 3, 2008." The order prohibits insurers from canceling or not renewing policies until January 3, 2008, and from canceling or not renewing a policy solely because of a claim resulting form the storm. Insurers must withdraw and reissue any notices of cancellation issued or mailed the week preceding December 3, 2007.

The Oregon order applies to insurance contracts "issued, delivered, or covering a risk located in the areas within Lincoln, Tillamook, Clatsop, Columbia and Yamhill Counties that have been affected by the severe winter storm." The areas covered by the order are further narrowed by zip code.

Like Commissioner Kreidler, the Oregon Insurance Division cited concerns about disruption of electricity and mails. A press release by the Insurance Division quoted its acting administrator, Carl Lundberg, as stating, "The storm has disrupted the lives of many Oregonians, and, as a result, many of them nay not receive a cancellation notice or not be able to pay their insurance premiums on time. We want to ensure no one loses insurance coverage because of the storm."