Catastrophic events are very challenging to property owners and insurance companies alike. After hurricanes Irma and Maria struck Puerto Rico, similarities to other events, like Katrina, were referenced by insurance companies to attempt to show the difficulties in processing the claims filed by its policyholders. The chaotic situation caused by the hurricanes moved the Puerto Rico government to enact several bills to amend the Puerto Rico Insurance Code.
One of such bills is Puerto Rico Senate Bill No. 1054. The Bill was introduced to require impartiality and objectivity in the resolution of disputes ventilated before an arbitrator selected to appraise property damage claims and to require the inclusion of a dispute resolution clause to assess the value of claims based on an appraisal procedure at the option of the insured party. Another article provides for the inclusion of a clause of appraisal valuation in insurance contracts in which any of the parties may request the appointment of an arbitrator to rule on disputes involving the value of damages or losses. The Bill also establishes that the statute of limitations to file a claim of damages covered by an insurance policy must conform with Article 1873 of the Puerto Rico Civil Code. The Bill also authorizes the Supreme Court to establish Special Courts to rule on insurance claims after an emergency or disaster has been declared by the Governor of Puerto Rico.
Senate Bill No. 1056 introduces a new article to the Puerto Rico Insurance Code empowering the Office of the Insurance Commissioner (OIC) to require insurance companies to make partial or advance payments of insured property damage claims, if certain conditions are met, after an emergency or disaster has been declared by the Governor of Puerto Rico. In these cases, insurance companies must clearly identify any partial payment offer, including a written report about the coverage and the amounts addressed in the payment offer.
Separately, House Bill No. 1727 intends to widen the market for surplus lines insurance in Puerto Rico. According to the OIC, before this bill, the surplus lines insurance market was controlled by fifteen (15) domestic insurance companies, given that participation by insurance companies not authorized to operate in Puerto Rico was extremely limited. The bill seeks to expand access to this market by eliminating those restrictions, opening the possibility for businesses, municipalities and government entities to enter into insurance contracts with out-of-state and international insurance companies for surplus lines. The law includes requirements for out-of-state and international insurance companies to operate in Puerto Rico, as well as for insurance brokers engaging with these companies.
Finally, House Bill No. 1729
sets the entire regulatory structure for the development and operation of microinsurances in Puerto Rico, including matters regarding filing before OIC, distribution of the product, and policy requirements, among others.
Senate Bill No. 1054 and Senate Bill No. 1056 were both approved by the Puerto Rico Legislature on November 13, 2018 while House Bill No. 1727 and House Bill No. 1729 were approved on November 15, 2018. The governor signed them into law on November 27, 2018. They are all effective immediately.