Settlement of Claims & Claims Settlement Practices

Which of the following is not considered an unfair claims settlement practice? requiring the insured to submit a formal proof of loss form making claims settlements without stating the coverage under which payments are made failing to acknowledge a request for claims forms settling claims based on an application that the agent altered without informing the insured

requiring the insured to submit a formal proof of loss form All of these constitute unfair claims settlement practices except requiring the insured to submit a formal proof of loss form.

Unfair Claims Settlement Practices [304.12-230; Reg. 806.12-092]

It is an unfair claims settlement practice for insurers to commit the following acts or omissions: misrepresenting pertinent facts or policy provisions relating to coverages at issue; failing to promptly acknowledge communications about claims; failing to use standards to promptly investigate and settle claims; refusing to pay claims without conducting a reasonable investigation; failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed; failing to make a good faith effort to promptly and fairly settle claims for which the insured is clearly liable; forcing insureds to file lawsuits to have a claim paid by offering substantially less than the amounts eventually recovered through the lawsuits; attempting to settle claims for less than the amount a reasonable person would believe he or she was entitled to based on advertising materials; making claims payments to insureds or beneficiaries without stating the coverage under which the payments are made; making insureds aware of a policy of appealing from arbitration awards in favor of insureds to compel them to accept settlements that are less than the amount awarded in arbitration; delaying the investigation or payment of claims by requiring submission of both a preliminary claim report and a formal proof of loss form when both forms contain substantially the same information; failing to promptly settle claims under one portion of the policy in order to influence settlements under other parts of the coverage; failing to provide a reasonable explanation of the basis in the policy for denying a claim or offering a compromise settlement; and failing to comply with the decision of an independent review entity to provide coverage for a covered person as a result of an external review.

Proper Claim Settlement Practices

Upon receiving a claimant's notice of claim, the insurer has 15 days in which to send the claimant the forms for filing proof of loss. Once the insurer receives proof of loss forms, the insurer must begin an investigation of the claim within 15 days. The insurer must affirm or deny coverage within a reasonable time, and must pay a claim within 30 days after receiving proof of loss. If the insurer does not pay the claim within 30 days (due to lack of a good faith attempt to settle the claim), the insurer must pay 12 percent annual interest, beginning 30 days after receiving proof of loss until the claim is paid. The insured may also collect reasonable attorney's fees that were incurred in order to collect the claim. If part of the claim is in dispute, the insurer must pay the undisputed part of the claim within 30 days after receiving proof of loss. With each claim payment, the insurer must give the insured an explanation of benefits, which includes the name of the provider of health-care services covered, dates of service, and an explanation showing how benefits were computed. If a claim remains unresolved 30 days after the insurer has received proof of loss, the insurer must give the insured a written explanation for the delay. If an investigation remains incomplete, the insurer must send the claimant a letter stating why additional time is needed to investigate the claim within 45 days after receiving the initial notice of claim and every 45 days thereafter. An insurer must acknowledge and respond to a written communication relating to a claim within 15 days. If a claim is denied, the insurer must give the claimant written notice within 15 days of its decision to deny the claim. The notice must refer to the policy provision, condition, or exclusion upon which the denial is based. Key Points

Which of the following is not an unfair claims settlement practice if committed by an insurance company in Kentucky? raising policy defenses to reduce a claim offering to settle claims for less than due to encourage litigation failing to promptly acknowledge communications about claims failing to promptly settle a claim for which liability is uncertain

failing to promptly settle a claim for which liability is uncertain An insurer is not obligated to settle a claim for which it is not clearly liable.