Title: Coverage Issues: Pennsylvania Unfair Insurance Practices Act, Unfair Claims Settlement Practices Reg
1Coverage 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
2PART 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
3TIME 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
4TIME 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
5TIME 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
6OTHER CONSIDERATIONS
- Section 146.8 Standards For Prompt, Fair And
Equitable Settlements Applicable To Automobile
Insurance - Section 146.9 Comparative Negligence
7PART 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
8UNFAIR 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
9PROCEDURES
- Investigation by commissioner
- Administrative hearing
- Administrative penalty
- Injunction
- Civil penalties
10PART 3
- Examples Of How The Unfair Insurance Practices
Act And Unfair Claims Settlement Practices
Regulations Have Been Used In Bad Faith Litigation
11BAD 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
12BAD 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
13THE IMPACT OF UIPA ANDUCSP ON DISCOVERY
- Plaintiffs can ascertain procedures for
implementing standards of UIPA and UCSP - Can an expert testify to standards?
14IMPACT OF UIPA AND UCSPON DAMAGES
15PART 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
17COMMUNICATED TO THE INSURED
- Send to individual insured or president of
corporation - Trustee in bankruptcy also effective
18FAIRLY 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
19TIMELINESS
- Insurers should issue letter promptly
- Insured must establish prejudice by failing to
timely issue letter - Test of timeliness is reasonableness
20CONCLUSION
- Reservation of rights and non-waiver agreements
are useful tools - Permits insurer to investigate while underlying
case proceeds - Courts will enforce them
21PART 5
22AVOIDING BAD FAITH
- Risk of liability
- Range of adverse verdict
- Strengths and weaknesses of evidence
- History of cases in geographic area
- Appearances of all parties
23RELATIONSHIP BETWEEN EXCESS INSURER AND PRIMARY
INSURER
- No direct contract with each other
- Doctrine of equitable subrogation
24DUTIES OF PRIMARY CARRIERIN EXCESS CASES
- Notify insured
- Notify excess carrier
- Notify both insured and excess carrier of
underlying case
25(No Transcript)