The Tennessee House passed the Unfair Trade Practices and Unfair Claims
Settlement Act of 2008 (Senate Bill 4208) on May 13 and it’s now on its
way to the governor’s desk.

The law as it stands now includes unfair insurance claims practices
under general laws for unfair trade practices. This new bill addresses
unfair claims practices on specific terms.

Under current law, an unfair claims practice is defined as knowingly
committing specified acts with such frequency as to indicate a general
business practice. The law also prevents a private right of action for
an unfair claims practice.

S.B. 4208 eliminates the requirement that the acts be performed
"with such frequency as to indicate a general business practice."
However, this bill prohibits the insurance commissioner from levying a
civil penalty or suspending or revoking a license for a violation of an
unfair claims practice, unless the practice is committed knowingly or
with "such frequency." The bill also strikes out the provision
regarding private rights of action.

Examples of specified acts the bill adds to the definition of unfair claims practices are:

• If the insurer requires a repair shop to be used, the insurer
  must adopt and implement reasonable standards to assure that the
  repairs are performed in a workmanlike manner.
• Refusing to pay claims without conducting a reasonable investigation.
• Failing,
  in the case of claims denials or offers of compromise settlement, to
  promptly provide a reasonable and accurate explanation of the basis for
  such actions.