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Marketing Essentials: The Deca Connection1st EditionCarl A. Woloszyk, Grady Kimbrell, Lois Schneider Farese 1,600 solutions What Is Unfair Claims Practice?Unfair claims practice is the improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. By engaging in unfair claims practices, an insurer tries to reduce its costs. However, this is illegal in many jurisdictions. Key Takeaways
Understanding Unfair Claims PracticeThe National Association of Insurance Commissioners (NAIC) has created model unfair claims practice legislation that mandates claims be handled fairly and that there be clear communication between the insurer and the insured. States, not the federal government, regulate insurance; many jurisdictions have implemented unfair claims practices laws modeled after the NAIC's model act. Also, most states have enacted a version of this model law. Called the Unfair Claims Settlement Practices Act, it protects insurance buyers from unjust behavior by insurers in the claims settlement process. Specifics of the law vary from state to state. Unfair Claims Settlement Practices Acts (UCSPA) are not federal law; instead, they are enforced by individual state insurance departments. Example of Unfair Claims PracticeConsider a small business owner that insures his company's building and business personal property under a commercial property policy. Unfortunately, a fire broke out in the building, causing $100,000 in property damage. The insurance company delays payment, rendering the business owner unable to repair any of the damage. The insurance company continues using delay tactics to avoid making a payment. For example, the claims representative keeps "forgetting" to send the claim forms. Also, the adjuster says he needs another proof of loss, but the small business owner has already submitted proof of loss twice. These are the types of situations that unfair claims practice laws are designed to prevent. Other Examples of Unfair Claims Practice
What kind of life insurance policy issued by a mutual Ensure provides a return of the visible surplus?participating life insurance policy <- A mutual insurer issues life insurance policies that provide a return of divisible surplus.
What is the purpose of a rating service company such as AM Best?AM Best assigns credit ratings that assess an insurance company's creditworthiness, which refers to the likelihood the company will default on its obligations. Consumers, financial professionals, and investors all use AM Best's credit ratings to help them make informed decisions.
What kind of life insurance policy issued by a mutual insurer provides a return of divisible surplus quizlet?What type of life insurance policy issued by a mutual insurer provides a return of divisible surplus? participating life insurance policy.
Why are dividends from a mutual insurer?Mutual insurers may distribute surplus profits to policyholders through dividends, or retain them in exchange for discounts on future premiums. Stock insurers can distribute surplus profits to shareholders in the form of dividends, use the money to pay off debt, or invest it back into the company.
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