Puerto Rico Appraisal Procedures for Commercial Insurance Claims

On June 12, 2018, the Office of the Commissioner of Insurance of Puerto Rico (OCI) issued Ruling Letter No. CN-2018-241-D, Appraisal Procedures for Insurance Claims for Commercial Property Related to Catastrophic Events.

The ruling letter states: 

The OCI hereby establishes the standards to be followed in appraisal processes in cases where there are disputes regarding the amount of the loss in the insurance claims for commercial property, including claims by divisions of the central government and municipalities, to encourage the use of alternative expeditious methods of resolving such claims.

The Puerto Rico Office of the Commissioner of Insurance confirmed that six requirements are needed before the Puerto Rico Appraisal Process can begin: 

1. A claim must have been submitted to the insurer.
2. The insurer has acknowledged coverage for the loss being claimed.
3. There is a dispute between the insurer and the insured or claimant regarding the amount of one or more items of the claim.
4. The controversy regarding the monetary amount of the loss is related to a commercial property policy, including the policies of government agencies and divisions, whether of the central government or the municipalities (no other matters related to any other kind of controversy will be resolved).
5. The Commissioner may, on the Commissioner’s own initiative, refer disputes regarding the amount of an insurance claim for commercial property or, under exceptional circumstances, insurance claims related to personal property, for an appraisal process.
6. No legal action has been brought in any court with regard to the claim.

This letter also defines the selection process for an appraiser, including the fees, neutral umpire, preliminaries of the appraisal process, the process, meeting place, the extent of work, and the result. The appraisal process goal is to resolve the central government, commercial insurance, and municipal insurance claims due to Hurricane Maria. This process is optional, simple, and individual. The documents about the appraisal process are confidential. The appraisal decision is not obligatory unless both parties have a written agreement that it will be. This process does not replace the rights’ of the policyholder or insurer to have the insurance claim settled in court.