Coverage Issues: Pennsylvania Unfair Insurance Practices
Download
Report
Transcript Coverage Issues: Pennsylvania Unfair Insurance Practices
Coverage Issues:
Pennsylvania 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
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 Misrepresentation
Of Policy Provision
TIME LIMITATIONS
UNDER 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
TIME LIMITATIONS UNDER
THE 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
TIME LIMITATIONS UNDER
THE 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
OTHER CONSIDERATIONS
Section 146.8 Standards For Prompt, Fair
And Equitable Settlements Applicable To
Automobile Insurance
Section 146.9 Comparative Negligence
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
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
PROCEDURES
Investigation by
commissioner
Administrative hearing
Administrative penalty
Injunction
Civil penalties
PART 3:
Examples Of How The Unfair Insurance
Practices Act And Unfair Claims Settlement
Practices Regulations Have Been Used In
Bad Faith Litigation
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
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
THE IMPACT OF UIPA AND
UCSP ON DISCOVERY
Plaintiffs can ascertain procedures for
implementing standards of UIPA and UCSP
Can an expert testify to standards?
IMPACT OF UIPA AND UCSP
ON DAMAGES
CLOSING THOUGHTS
PART 4:
Non-waiver Agreements
And Reservation Of
Rights Letters
Notifying the insured of
coverage issues
REQUIREMENTS
Communicated to the
insured
Fairly inform the insured
of the insurer's position
Timeliness
COMMUNICATED TO THE INSURED
Send to individual
insured or president of
corporation
Trustee in bankruptcy
also effective
FAIRLY INFORM THE INSURED
OF 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
•
TIMELINESS
Insurers should
issue letter
promptly
Insured must
establish prejudice
by failing to timely
issue letter
Test of timeliness
is reasonableness
CONCLUSION
Reservation of rights and non-waiver
agreements are useful tools
Permits insurer to investigate while
underlying case proceeds
Courts will enforce them
PART 5:
EXCESS VERDICT ISSUES
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
RELATIONSHIP BETWEEN EXCESS
INSURER AND PRIMARY INSURER
No direct contract with each other
Doctrine of equitable subrogation
DUTIES OF PRIMARY CARRIER
IN EXCESS CASES
Notify insured
Notify excess carrier
Notify both insured and
excess carrier of
underlying case