Insurance adjusters and companies must comply with statutory regulations regarding claims handling. Identify the specific Unfair Claims Settlement Practice category that corresponds to each of the following insurer actions.
- Misrepresentation of Policy ProvisionsInforming a beneficiary that a policy contains a two-year contestability period, even though their specific contract only specifies one year.
- Failure to Affirm or Deny Coverage PromptlyReceiving a fully executed proof of loss for severe roof damage but providing no acceptance or denial decision to the homeowner for over two months.
- Compelling Insureds to Institute LitigationOffering a claimant 30% of the undisputed, documented medical costs for a covered auto liability claim, forcing them to sue for full recovery.
- Failure to Implement Reasonable Investigation StandardsMandating that adjusters wait 45 days before gathering evidence or interviewing witnesses for newly reported commercial casualty claims.
Answer
Misrepresentation pairs with the false contestability period; Affirm/Deny Promptly pairs with the two-month proof of loss delay; Compelling Litigation pairs with the 30% lowball auto offer; Investigation Standards pairs with the 45-day commercial claim delay.
Each scenario violates a specific provision of the NAIC Unfair Claims Settlement Practices Act. Misrepresenting provisions involves stating incorrect contract terms. Compelling litigation involves 'lowballing' undisputed claims. Failing to investigate involves a lack of procedures for gathering initial facts, while failing to affirm/deny coverage involves sitting on a completed proof of loss without making a decision.
Step-by-Step Solution
Key Concept
Unfair Claims Settlement Practices