6 Enumerated Unfair Insurance Practices Examples:Misrepresentation in Sale of CoverageFalse Information in AdvertisingFalsifying Information about Insurer’s Financial ConditionUnfair Discrimination Offering PoliciesProhibition on Political ContributionsRSA 417:14
7 Enumerated Unfair Claims Settlement Practices Must be“committed without just cause and not merely inadvertently or accidently.”
8 RSA 417:4, XV (a) (1) – (14)14 Enumerated Unfair Claims Settlement Practices2 of them really are aimed at the company as not the adjuster
9 Enumerated Unfair Claims Settlement Practices Knowingly misrepresenting pertinent facts or policy provisions relating to coverage at issue to a claimant or an insured;RSA 417:4, XV (a) (1)
10 Claims Settlement Practices Enumerated UnfairClaims Settlement PracticesFailing to acknowledge and act promptly upon communications with respect to claims arising under insurance policiesRSA 417:4, XV (a) (2)
11 Claims Settlement Practices Enumerated UnfairClaims Settlement PracticesNot attempting in good faith to effectuate prompt, fair and equitable settlements or compromises of claims in which liability has become reasonably clearRSA 417:4, XV (a) (4)
12 Claims Settlement Practices Enumerated UnfairClaims Settlement PracticesCompelling claimants to institute litigation to recover amounts due under insurance policies by offering substantially less than the amounts ultimately recovered in actions brought by themRSA 417:4, XV (a) (5)
13 Claims Settlement Practices Enumerated UnfairClaims Settlement PracticesAdopting or making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitrationRSA 417:4, XV (a) (6)
14 Claims Settlement Practices Enumerated UnfairClaims Settlement PracticesAttempting settlement or compromise of a claim on the basis of an application which was altered without notice to, or knowledge or consent of the insuredRSA 417:4, XV (a) (7)
15 Claims Settlement Practices Enumerated UnfairClaims Settlement PracticesAttempting to settle or compromise a claim for less than the amount which the insured had been led to believe the insured was entitled to by written or printed advertising material accompanying or made part of an applicationRSA 417:4, XV (a) (8)
16 Claims Settlement Practices Enumerated UnfairClaims Settlement PracticesAttempting to delay the investigation or payment of claims by requiring an insured and the insured's physician to submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same informationRSA 417:4, XV (a) (9)
17 Claims Settlement Practices Enumerated UnfairClaims Settlement PracticesMaking any claim payment not accompanied by a statement setting forth the benefits included within the claim paymentRSA 417:4, XV (a) (10)
18 Claims Settlement Practices Enumerated UnfairClaims Settlement PracticesFailing to affirm or deny coverage of claims within a reasonable time after proof of loss forms have been submittedRSA 417:4, XV (a) (11)
19 Claims Settlement Practices Enumerated UnfairClaims Settlement PracticesRefusing payment of a claim solely on the basis of an insured's request to do so without making an independent evaluation of the insured's liability based upon all available informationRSA 417:4, XV (a) (12)
20 Claims Settlement Practices Enumerated UnfairClaims Settlement PracticesKnowingly underestimating the value of any claim by an insurer or by an adjuster representing the insurerRSA 417:4, XV (a) (14)
21 Prohibited Practices for Auto Glass Repairs – RSA 417:4, XX Substantially the Same as Reg. 1002Can’t steer businessCannot coerce claimant to use a specific repairerClaimant allowed to use own repair shop but must pay increased costWhere there is a dispute with the shop as to cost of repair, Insurance must provide name of a ready and willing repairer
22 Enumerated Practices Penalty Loss of license$2,500 fine per violation; ORPay consumer actual economic loss up to $2,500 per violation→Consumer must waive right to sue.
23 UNDEFINED UNFAIR PRACTICES RSA 417:12, IInsurance DepartmentHas reason to believeA practice is unfair and deceptive
24 UNDEFINED UNFAIR PRACTICES RSA 417:12, I – Procedure:Show cause hearing scheduledWhich includes Insurance Departments plan of actionTo be resulted by the insurer
25 UNDEFINED UNFAIR PRACTICES RSA 417:12, II - Department determines the practice is unfair or deceptive then:Issues a cease and desist orderSubject to appeal to N.H. Supreme Court
26 UNDEFINED UNFAIR PRACTICES Violation of Cease & Desist Order – RSA 417:13.Loss of license$2,500 fine per violation
27 Private Right of Action RSA 417:19 Insurance Department as Gatekeeper (1)If Insurance Department finds no violationNo suit may be filedIf Insurance Department takes no action or a complaint after 120 daysno suit may be filed
28 Private Right of Action RSA 417:21 Insurance Department as Gatekeeper (2)Finding of violation by Insurance DepartmentPrima Facia evidence of a violation for civil suitBut not if finding is the result of a consent agreement judgment entered into by the Insurer.
29 Private Right of Action RSA 417:21 Double Recovery ProhibitedIf same behavior constitutes a tort, breach of contract and a violation of RSA Chapter 417 a finding of a statutory violation does not permit additional damages on top of tort or contract damages
30 Private Right of Action RSA 417:20 A Plaintiff who Prevails in Civil Suit for Violation of RSA Chapter 417, in Addition to Damages is Entitled to:Reasonable Attorney Fees; andCosts of Suit
31 STATUTORY AUTHORITY OF INSURANCE DEPARTMENT RSA 400-A Broad Powers to Enforce Insurance LawsSpecifically grantedReasonably implied
32 STATUTORY AUTHORITY OF INSURANCE DEPARTMENT RSA 400-A Conduct hearings and issue orders to enforce lawsIssue regulations→violation = loss of license or $2,500 fineInvestigate to promote efficient administration of insurance laws→10 days to respond to Insurance Department request for informationCan file suits to enforce laws.
33 Privileges Under RSA 400-A:16 Documents Produced by Order of theInsurance Department cannot be subject to:SubpoenaCivil DiscoveryAdmission in Evidence in a Civil CaseA Right-to-Know Statute Request
34 Privileges Under RSA 400-A:16 Additionally:No Insurance Department Employee can be forced to testify in a civil matter about document contents; andProduction of documents does not result in a waiver of privilege or confidentiality
35 Exceptions to Privilege Rule RSA 400-A:16,10 Insurance Department can use documents to enforce rules and take legal actionProvided confidentiality is protected the Department can share documents with:State, Fed & International Regulatory AgenciesState, Fed and International Law EnforcementNational Association of Insurance Commissioners
36 Exceptions to Privilege Rule RSA 400-A:16,10 Can disclose documents to complaining partyIf it will help explain Departments response to a complaintProvided disclosure does not interfere with civil , criminal or administrative proceedingsCan disclose statistics about number and nature of complaints filed with the Department
37 HEARINGS & APPEAL RSA 400-a Hearing may be held for any purpose within scope of insurance lawMandatory when required by statuteMandatory upon written request of a person aggrieved by an act or impending actRequest Deadline: 30 days after person knew or should have known of the act in question
38 HEARINGS & APPEAL RSA 400-a Application for hearing must:State why applicant is aggrievedState the Basis for Requested ReliefStatute or regulation
39 HEARINGS & APPEAL RSA 400-a Hearing to be held in 30 days if Department finds application isTimelyMade in Good FaithApplicant would be aggrieved if his grounds are establishedFailure to hold hearing in 30 days = denied of relief
40 HEARINGS & APPEAL RSA 400-a Appeal to NH Supreme Courtafter Motion for Rehearing denied.RSA Chapter 541
41 Consumer Service Division Established by Reg InsAttempts to mediate disputes between insured and carriersBefore matter is in litigation
42 N.H. Consumer Protection Act Under Bell v. Liberty Mutual RSA Chapter258-A does not apply to insurance carriersbecause already subject to extensiveregulations.No multiple damagesNo shifting of costs or attorneys fees
43 Bad Faith Failure to Settle Within Policy Limits Dumas Line of Cases
44 Bad Faith Failure to Settle Within Policy Limits Bad Faith Claims Based on Contract:Under New Hampshire law, every party to a contract hasan implied obligation of good faith and fair dealing. If aninsured believes that the insurance company has failed tosettle or pay a claim covered under the insurance policy,that insured may bring a first-party claim against theinsurance carrier for breach of the insurance contract.Bursey v. Clement, 118 N.H. 412(1979);Jarvis v. Prudential Ins. Co., 122 N.H. 648 (1982).
45 Bad Faith Failure to Settle Within Policy Limits An insurer's bad faith refusal to settle or pay a claimpursuant to its contractual obligations does not give rise toa tort action. Accordingly, if an insurer refused to settle orpay a claim, even if acting in bad faith, the plaintiff will not,for example, be able to recover for emotional distress.Recovery in such instances is limited to the policy limits,interest, and any unavoidable consequential damages theplaintiff can prove.A. B. C. Builders, Inc. v. American Mutual Ins. Co., 139 N.H. 745 (1995);Lawton v. Great Southwest Fire Ins. Co., 118 N.H. 607, (1978).
46 Bad Faith Failure to Settle Within Policy Limits 1. In General:Under New Hampshire law, a party may sue an insurance carrier forfailure to settle a claim against that party within the policy limits. NewHampshire has specifically adopted a negligence standard-defined ashow a "reasonable person might act under the same circumstances."An insurance carrier, therefore, has a duty to exercise due care inascertaining all of the facts of the case, both as to liability and damagesand in appraising the risk to the insured of being obliged to pay anyportion of a verdict in excess of policy limits.Gelinas v. Metropolitan Prop. & Liability Inc. Co., 131 N.H. 154, 161 (1988);Dumas v. Hartford Accident & Indemnity Co., 94 N.H. 484 (1947).
47 Bad Faith Failure to Settle Within Policy Limits 2. A Question of Fact:Whether an insurance company has acted ingood faith is a question of fact.Gelinas v. Metro. Prop. & Liability Ins. Co., 131 N.H. 154, 160 (1988);Lawton v. Greatsouthwest Fire Ins. Co., 118, N.H. 607, (1978).
48 Bad Faith Failure to Settle Within Policy Limits 3. Duty to Avoid Placing Insured Needlessly at Risk:An insurance company should not shy away from defending cases itbelieves it reasonably has a basis for defending. The insurer has areasonable right to try its case in court. It cannot, however, be "undulyventuresome at the expense of the insured." The insurance companymust exercise the same caution that the ordinary person of averageprudence would employ under the circumstances. Stated otherwise,"the duty an insurance company owes to its insured is to usereasonable judgment in deciding whether to run the risk of an award inexcess of [the policy limits.]“Dumas v. Hartford Accident & Indemnity Co., 94 N.H. 484, 489 (1947);Dumas v. State Farm Mutual Automobile Ins. Co., 111 N. H. 43, (1971).
49 Bad Faith Failure to Settle Within Policy Limits No Strict Liability for Failure to SettleThe New Hampshire Supreme Court has expresslyrejected the idea of holding an insurance carrierstrictly liable for failing to settle within the policylimits.Dumas v. State Farm Mutual Automobile Ins. Co., 111 N.H. 43, (1971).
50 Bad Faith Failure to Settle Within Policy Limits 5. The Insurance Company's ConflictWhen the settlement value of a case approaches the policy limits, the risk to the insurance company in taking the case to trial increases. Accordingly, insurance carriers must give more weight to the insured's interest as the settlement value of the claim approaches the policy limits.Dumas v. State Farm Mutual Automobile Ins. Co., 111 N.H. 43, 48 (1971).
51 Bad Faith Failure to Settle Within Policy Limits 6. Bad Faith Claims By Third PartiesA third-party has no direct cause of action against theinsurance company for negligent failure to settle.Duncan v. Lumbermen’s Mutual Cas. Co.91 N.H. 349, 349 (1941)However, tort claims are freely assignable, so third parties cantake assignments of any cause of action the insured mighthave against the insurer.Dumas v. State Farm Mutual Automobile Ins. Co., 111 N.H. 43, 48 (1971).
52 Bad Faith Failure to Settle Within Policy Limits 7. Duty of Primary Carrier to Excess CarrierA primary carrier owes no duty of care to and excesscarrier to settle a claim within the policy limits. However,an excess carrier may pursue a Dumas claim against theprimary carrier based on an assignment clause in its policy.A Dumas action based on such assignment is not barredBy the fact that the actual insured would suffer no financialloss.Allstate Ins. Co. v. Reserve Ins. Co., 116 N.H. 806, 808 (1977).
53 Malicious or “Bad Faith” Defense New Hampshire recognizes the tort of malicious defense.A defendant may be found liable for malicious defense if, indefending a claim, he or sheActs without a credible basis in fact;Knowing the defense lacks merit;Primarily for a purpose other than securing the proper adjudication of the claim;The previous proceeding terminated in favor of the party bringing the malicious defense action; andInjury or damages have been sustained.Aranson v. Schroeder, 140 N.H 359 (1995).
54 New Hampshire Statutes Governing Insurance Claim Practices The EndGetman, Schulthess & Steere, PAThree Executive Park Drive Ste 9Bedford, NH