Unfair Claims Settlement Act – NAIC – MDL-900

  • 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 insurance 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 interpretation could be astronomical as far as insurance costs are concerned…..
To: Market Conduct and Trade Practices (Bl) Subcommittee – NAIC
From: National Association of Independent Insurers – NAII

1980-1, NAIC Proceedings

  • 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.