Unfair Claims Settlement Act - NAIC
UNFAIR CLAIMS SETTLEMENT PRACTICES ACT
Table of Contents
Section 1. Declaration of Purpose
Section 2. Definitions
Section 3. Improper Claims Practices
Section 4. Acts Constituting Improper Claims Practices
Section 5. Statement of Charges
Section 6. Cease and Desist Order - Judicial Review
Section 7. Regulations
Section 8. Severability
Section I. Declaration of Purpose
153
ATTACHMENT TWO
The purpose of this Act is to set forth standards for the investigation and disposition of claims arising under contracts and certificates issued to residents of [insert state]. Nothing herein shall be construed to create or imply a private cause of action for violation of this Act.
1990-1A, NAIC Proc.
In addition, it was not the intent of the model act to provide a third party with a civil cause of action for a single incident by an insurer.
- We are strongly recommending this action because of a decision by the California Supreme Court who, in a 4 to 3 decision last March 29th, held that an individual claimant making a claim against an instirance company had a right under the California Unfair Claims Settlement Practices Act to bring a tort action against the insurer for allegedly violating one of the standards in the Act.
- In effect, the Court created a new cause of action for any claimant when the insurance company allegedly fails in a single incident to adhere to the standards of the Act.
- The claimant gets two times at bat for a single alleged act causing the injury - once against the insured in a negligent action and secondly against the insured's company if a settlement is allegedly delayed.
The result of this interpre,ation could be astronomical as far as insurance costs are concerned.....
To: Market Conduct and Trade Practices (Bl) Subcommittee
From: National Association of Independent Insurers
1980-1, NAIC Proceedings