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.
