Question

Which act by an insurer, if performed without just cause and with frequency indicating standard operating procedures, constitutes an unfair claims settlement practice?

a. Delaying claim investigations without valid reasons
b. Promptly processing legitimate claims
c. Providing clear communication about claim denials
d. Offering fair settlements based on policy terms

Answer 1

Delaying claim investigations without valid reasons is an unfair claims settlement practice performed by an insurer without just cause and with frequency indicating standard operating procedures.

Step-by-step explanation:

An act by an insurer that constitutes an unfair claims settlement practice, if performed without just cause and with frequency indicating standard operating procedures, is delaying claim investigations without valid reasons. This means that the insurer is intentionally delaying the investigation of a claim without any legitimate justification. This practice is considered unfair because it unjustly prolongs the settlement process for the insured.

For example, suppose an insured submits a claim for a car accident, and the insurer continuously delays the investigation without providing any valid reasons. This would be considered an unfair claims settlement practice.

In contrast, the other options mentioned - promptly processing legitimate claims, providing clear communication about claim denials, and offering fair settlements based on policy terms - are all examples of fair and ethical practices that insurance companies should adhere to.