31.15.07.03

.03 Unfair Claim Settlement Practices.

A. A prohibited unfair claim settlement practice occurs if an insurer commits one or more of the following acts:

(1) Misrepresents pertinent facts or policy provisions relating to the claim at issue. For the purposes of this regulation, misrepresentation includes, but is not limited to, the following acts:

(a) Providing incomplete or misleading disclosure of pertinent facts or policy provisions relating to the claim at issue;

(b) Concealing from a first-party claimant benefits, coverages, or other provisions of a policy when these benefits, coverages, or other provisions are pertinent to the claim at issue;

(c) Failing, upon written request, to disclose to a first-party claimant all benefits, coverages, or other provisions of an insurance policy under which a claim is presented;

(d) Except when there is a time limit specified in the policy or provided by law, making oral or written statements to any claimant that:

(i) There is a requirement that the claimant give written notice of loss or proof of loss within a specified time, and

(ii) The company is relieved of its obligations under the policy if the time limit is not complied with;

(e) Making oral or written statements to any claimant that there is a requirement that the claimant sign a release that extends beyond the subject matter that gave rise to the claim payment; or

(f) Issuing a check or draft in partial settlement of a loss or claim under a specific coverage or coverages, which check or draft contains language releasing the insurer or its insured from their total liability.

(2) Attempts to settle a claim on the basis of an application which has been altered without notice to, or the knowledge or consent of, the insured. An insurer may not be found to have violated this regulation unless the:

(a) Insurer knew or had reason to know of the alteration; and

(b) Alteration is material to settlement of the claim at issue.

(3) Refuses to pay a claim for an arbitrary or capricious reason based on all available information.

(4) Fails to include, in any claim paid to an insured or beneficiary, a statement or other identification setting forth the specific policy coverage under which the payment is made.

(5) Fails to make a good faith attempt to settle a claim promptly under one portion of a policy, whenever liability is reasonably clear, in order to influence settlements under other portions of the policy.

(6) Fails to promptly provide a reasonable explanation of the basis for denial of a claim when requested to do so.

(7) Fails to act in good faith in settling a first party claim under a policy of property and casualty insurance.

B. A prohibited unfair claim settlement practice occurs if an insurer commits one or more of the following acts with such frequency as to indicate a general business practice:

(1) Misrepresents pertinent facts or policy provisions relating to the coverages at issue. For the purposes of this regulation, misrepresentation includes, but is not limited to, the following acts:

(a) Providing incomplete or misleading disclosure of pertinent facts or policy provisions related to the coverages at issue;

(b) Concealing from a first-party claimant benefits, coverages, or other provisions of a policy when these benefits, coverages, or other provisions are pertinent to the claim at issue;

(c) Failing, upon written request, to disclose to a first-party claimant all benefits, coverages, or other provisions of an insurance policy under which a claim is presented;

(d) Except when there is a time limit specified in the policy or provided by law, making oral or written statements to any claimant that:

(i) There is a requirement that the claimant give written notice of loss or proof of loss within a specified time, and

(ii) The company is relieved of its obligations under the policy if the time limit is not complied with;

(e) Making oral or written statements by any claimant that there is a requirement that the claimant sign a release that extends beyond the subject matter that gave rise to the claim payment; or

(f) Issuing a check or draft in partial settlement of a loss or claim under a specific coverage or coverages, which check or draft contains language releasing the insurer or its insured from total liability.

(2) Fails to include, in claims paid to insureds or beneficiaries, statements or other identification setting forth the specific policy coverage under which the payments are made.

(3) Fails to promptly provide to any claimants reasonable explanations of the basis for denial of claims or the offer of compromise settlements.

(4) Fails to adopt and implement reasonable standards for the prompt investigation of claims arising under policies.

(5) Refuses to pay claims without conducting reasonable investigations based on all available information.

(6) Fails to make good faith attempts to settle claims promptly, fairly, or equitably once liability has become reasonably clear.

(7) Compels insureds to institute litigation to recover amounts due them under policies by offering substantially less than the amounts ultimately recovered in actions brought by the insureds.

(8) Attempts to settle claims on the basis of applications which have been altered without notice to, or the knowledge or consent of, insureds. An insurer may not be found to have violated this regulation unless the:

(a) Insurer knew or had reason to know of the alterations; and

(b) Alterations are material to settlement of the claims at issue.

(9) Fails to make good faith attempts to settle claims promptly under one portion of a policy, whenever liability is reasonably clear, in order to influence settlements under other portions of the policy.

(10) Fails, upon receipt of notification of claims, to acknowledge receipt of the notification within 15 working days, unless payment is made within that period of time.

(11) Fails, upon receipt of inquiries from the Maryland Insurance Administration regarding claims, to furnish the Maryland Insurance Administration with adequate responses to the inquiries within 15 working days or within the time period specified by the Maryland Insurance Administration in correspondence to the insurer, whichever is greater.

(12) Fails to affirm or deny coverage of claims within 15 working days after receiving properly completed claim forms or other proofs of loss, unless the provisions of Regulation .04B of this chapter apply or unless there is a time limit specified in the policy.

(13) Refuses to fully satisfy claims for arbitrary or capricious reasons.

(14) Refuses or unreasonably delays payment to claimants of amounts due them when coverage, liability, and amount of damages are reasonably clear.

(15) Fails to provide appropriate replies to claimants or their representatives within 15 working days of receiving written communications from claimants or their representatives which suggest that a response is expected.

(16) Fails to act in good faith in settling a first party claim under a policy of property and casualty insurance.

C. The provision of any claim forms required by the insurer, instructions, and reasonable assistance, in order that first-party claimants can comply with policy conditions and the insurer's reasonable requirements for filing claims, shall satisfy the requirement that insurers acknowledge receipt of notification of claims within 15 working days.