Coverage Issues: Pennsylvania Unfair Insurance Practices Act, Unfair Claims Settlement Practices Reg - PowerPoint PPT Presentation

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Coverage Issues: Pennsylvania Unfair Insurance Practices Act, Unfair Claims Settlement Practices Reg

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Title: Coverage Issues: Pennsylvania Unfair Insurance Practices Act, Unfair Claims Settlement Practices Reg


1
Coverage IssuesPennsylvania Unfair Insurance
Practices Act, Unfair Claims Settlement Practices
Regulations, Reservation of Rights Letters and
Non-Waiver Agreements and Excess Verdict Issues
  • Presented to
  • PAMIC APRIL 5, 2006
  • Krista F. Fiore, Esquire
  • Michael S. Saltzman, Esquire
  • FINEMAN, KREKSTEIN HARRIS, P.C.
  • www.finemanlawfirm.com

2
PART 1
  • UNFAIR CLAIMS SETTLEMENT PRACTICES (REGULATIONS)
  • Section 146.1 Scope Of The Act
  • Section 146.2 Definitions
  • Section 146.3 File And Record Documentation
  • Section 146.4 MisrepresentationOf Policy
    Provision

3
TIME LIMITATIONSUNDER THE REGULATIONS
  • Section 146.5 Failure To Acknowledge Pertinent
    Communications - Time Limits
  • Ten working days - notification of claim
  • Fifteen working days - insurance department
    inquiry
  • Ten working days - reply period
  • Ten working days - reply period for first-party
    claims

4
TIME LIMITATIONS UNDERTHE REGULATIONS
  • Section 146.6
  • Standards For Prompt Investigation Of Claims -
    Time Limits
  • Investigation complete within 30 days, or if not
    complete, report to insured every 45 days
    thereafter

5
TIME LIMITATIONS UNDERTHE REGULATIONS
  • Section 146.7 Standards For Prompt, Fair And
    Equitable Settlements Applicable To Insurers
  • Acceptance or denial of claim - first-party
    claims
  • Fifteen working days
  • Fraud exception - reasonable time
  • The forty-five day cycle - first-party claims
  • Unrepresented claimants - Statute of Limitations

6
OTHER CONSIDERATIONS
  • Section 146.8 Standards For Prompt, Fair And
    Equitable Settlements Applicable To Automobile
    Insurance
  • Section 146.9 Comparative Negligence

7
PART 2
  • Unfair Insurance Practices Act
  • 40 P.S. 1171.1 (2005)
  • Regulation of insurance business and definitions
    of unfair methods of competition and unfair or
    deceptive acts

8
UNFAIR METHOD OF COMPETITION OR UNFAIR OR
DECEPTIVE ACTS OR PRACTICES
  • Connection with Unfair Insurance Practices Act
    Regulations
  • Investigation
  • Determination of coverage
  • Settlements
  • Failure to settle
  • Inducement to settle

9
PROCEDURES
  • Investigation by commissioner
  • Administrative hearing
  • Administrative penalty
  • Injunction
  • Civil penalties

10
PART 3
  • Examples Of How The Unfair Insurance Practices
    Act And Unfair Claims Settlement Practices
    Regulations Have Been Used In Bad Faith Litigation

11
BAD FAITH ISSUES
  • No private cause of action under the UIPA or UCSP
  • Insurance Commissioner, exclusive jurisdiction
  • Allegations of violations do not amount to bad
    faith
  • Violations will be considered in determining bad
    faith, and breaches of covenant of good and fair
    dealing

12
BAD FAITH ISSUES
  • An insurer can be liable for bad faith if it
    fails to conduct a good faith investigation
    and/or neglects to communicate promptly with the
    insured
  • Cases have held that technical violations do not
    constitute bad faith
  • Better to be safe than sorry

13
THE IMPACT OF UIPA ANDUCSP ON DISCOVERY
  • Plaintiffs can ascertain procedures for
    implementing standards of UIPA and UCSP
  • Can an expert testify to standards?

14
IMPACT OF UIPA AND UCSPON DAMAGES
  • CLOSING THOUGHTS

15
PART 4
  • Non-waiver Agreements And Reservation Of Rights
    Letters
  • Notifying the insured of coverage issues

16
REQUIREMENTS
  • Communicated to the insured
  • Fairly inform the insured of the insurer's
    position
  • Timeliness

17
COMMUNICATED TO THE INSURED
  • Send to individual insured or president of
    corporation
  • Trustee in bankruptcy also effective

18
FAIRLY INFORM THE INSUREDOF THE INSURER'S
POSITION
  • Identify the potential coverage disputes
  • Inform the insured that there is the potential
    that it could incur liability for any non-covered
    claim
  • Acknowledge that the company is investigating
    and/or defending the claim without surrendering
    its right to disclaim coverage for any
    non-covered claim

19
TIMELINESS
  • Insurers should issue letter promptly
  • Insured must establish prejudice by failing to
    timely issue letter
  • Test of timeliness is reasonableness

20
CONCLUSION
  • Reservation of rights and non-waiver agreements
    are useful tools
  • Permits insurer to investigate while underlying
    case proceeds
  • Courts will enforce them

21
PART 5
  • EXCESS VERDICT ISSUES

22
AVOIDING BAD FAITH
  • Risk of liability
  • Range of adverse verdict
  • Strengths and weaknesses of evidence
  • History of cases in geographic area
  • Appearances of all parties

23
RELATIONSHIP BETWEEN EXCESS INSURER AND PRIMARY
INSURER
  • No direct contract with each other
  • Doctrine of equitable subrogation

24
DUTIES OF PRIMARY CARRIERIN EXCESS CASES
  • Notify insured
  • Notify excess carrier
  • Notify both insured and excess carrier of
    underlying case

25
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