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Article 1
Unfair Claims Settlement Acts or Practices

Section

10. Purpose.

20. Scope.

30. File and record documentation.

40. Required claim communication.

50. Standards for prompt investigation of claims.

60. Disclosure and representation of coverage provisions.

70. Standards for prompt, fair, and equitable settlements.

75. Arbitration.

80. Additional standards for prompt, fair, and equitable settlements of motor vehicle claims.

90. Additional standards for prompt, fair, and equitable settlements of property claims.

100. Additional standards for prompt, fair, and equitable settlements of workers' compensation claims.

110. Additional standards for prompt, fair, and equitable settlements of health claims.

300. Definitions.

3 AAC 26.010. Purpose

(a) The purpose of 3 AAC 26.010 - 3 AAC 26.300 is to define minimum standards for claim settlement acts and practices.

(b) Violation of a standard is an unfair or deceptive act and is prohibited.

(c) Violation of a standard with such frequency as to indicate a general business practice is an unfair or deceptive practice and is prohibited.

(d) Violation of a standard by a person who knew or should have known an act or practice violated the standard is subject to an additional penalty under AS 21.36.910 (e).

History: Eff. 5/6/89, Register 110

Authority: AS 21.06.090

AS 21.36.010

AS 21.36.125

AS 21.36.900

AS 21.36.910

Editor's note: In 2010 the revisor of statutes, acting under AS 01.05.031 , renumbered former AS 21.36.150 as AS 21.36.900 , renumbered former AS 21.36.320 as AS 21.36.910 , and redesignated former AS 21.36.350 as AS 21.36.125 (c). As of Register 196 (January 2011), the regulations attorney made a conforming technical revision under AS 44.62.125 (b)(6), to 3 AAC 26.010(d) , so that the cross-reference to former AS 21.36.320 (e) now refers to the renumbered statute, AS 21.36.910 (e). In addition, the regulations attorney made conforming technical revisions to the authority citation that follows 3 AAC 26.010, so that the citations to former AS 21.36.150 and 21.36.320 now refer to the renumbered statutes, AS 21.36.900 and 21.36.910. Also, the regulations attorney deleted the citation to former AS 21.36.350 , to reflect that the authority citation already includes a citation to AS 21.36.125 , the section where material formerly in AS 21.36.350 was relocated.

3 AAC 26.020. Scope

3 AAC 26.010 - 3 AAC 26.300 apply to all persons transacting a business of insurance who participate in the investigation, adjustment, negotiation, or settlement of a claim under all types of insurance.

History: Eff. 5/6/89, Register 110

Authority: AS 21.03.010

AS 21.06.090

AS 21.33.011

AS 21.36.020

AS 21.36.125

AS 21.75.310

AS 21.76.020

AS 21.84.050

AS 21.87.020

AS 21.88.010

Editor's note: In 2010 the revisor of statutes, acting under AS 01.05.031 , redesignated former AS 21.36.350 as AS 21.36.125 (c). As of Register 196 (January 2011), the regulations attorney made a conforming technical revision under AS 44.62.125 (b)(6), to the authority citation that follows 3 AAC 26.020, deleting the citation to former AS 21.36.350 to reflect that the authority citation already includes a citation to AS 21.36.125 , the section where material formerly in AS 21.36.350 was relocated.

3 AAC 26.030. File and record documentation

(a) Any person transacting a business of insurance who participates in the investigation, adjustment, negotiation, or settlement of a claim under any type of insurance must document each action taken on a claim. The documentation must contain all notes, work papers, documents and similar material. The documentation must be in sufficient detail that relevant events, the dates of those events, and all persons participating in those events can be identified. The documentation may include legible copies of originals and may be stored in the form of microfilm or electronic media. The documentation is subject to examination and copying by the director or persons acting on the director's behalf.

(b) A person transacting a business of insurance who participates in the investigation, adjustment, negotiation, or settlement of a claim under any type of insurance shall respond to inquiries from the director related to the claim not later than 10 days from the date of the director's inquiry. The response must include all documentation within the person's possession, custody, or control, or in the possession, custody, or control of other persons or entities acting on behalf of that person in relation to the claim, that is responsive to the director's inquiry.

(c) The director may assess a penalty under AS 21.36.910 of not more than $2,500 for each violation or $25,000 for engaging in a general business practice that violates (b) of this section.

History: Eff. 5/6/89, Register 110; am 6/6/2015, Register 214

Authority: AS 21.06.090

AS 21.06.120

AS 21.06.130

AS 21.36.090

AS 21.36.125

AS 21.36.410

AS 21.36.910

Editor's note: In 2010 the revisor of statutes, acting under AS 01.05.031 , redesignated former AS 21.36.350 as AS 21.36.125 (c). As of Register 196 (January 2011), the regulations attorney made a conforming technical revision under AS 44.62.125 (b)(6), to the authority citation that follows 3 AAC 26.030, deleting the citation to former AS 21.36.350 to reflect that the authority citation already includes a citation to AS 21.36.125 , the section where material formerly in AS 21.36.350 was relocated.

3 AAC 26.040. Required claim communication

(a) Any person transacting a business of insurance who participates in the investigation, adjustment, negotiation, or settlement of a first-party claim must:

(1) within 10 working days after receipt of notification of a claim, give written acknowledgement to the first-party claimant identifying the person handling the claim, including the person's name, address, telephone number, the firm name, and the file number; payment of the claim within 10 working days after notification is satisfactory acknowledgement; provision of necessary claim forms, written instructions, and assistance as required in (3) of this subsection is satisfactory acknowledgement; notification of a claim to an agent constitutes notification to the principal;

(2) within 15 working days after receipt, make an appropriate reply to all other communications from a first-party claimant which reasonably indicates that a response is expected; receipt of a communication by an agent constitutes receipt by the principal;

(3) upon receipt of notification of a claim, promptly provide necessary claim forms, instructions, and assistance so that the first-party claimant is able to comply with legal, policy, or contract provisions and other reasonable requirements.

(b) Any person transacting a business of insurance who participates in the investigations, adjustment, negotiation, or settlement of a third-party claim must:

(1) within 10 working days after notification of the claim from a third-party claimant, give written acknowledgement to the third-party claimant, identifying the person handling the claim, including the person's name, address, phone number, the firm name, and the file number; payment of the claim within 10 working days after notification is satisfactory acknowledgement; provision of necessary claim forms, written instructions, and assistance as required in (3) of this subsection is satisfactory acknowledgement; notification of a claim to an agent constitutes notification to the principal;

(2) within 15 working days after receipt, make an appropriate reply to all other communications from a third-party claimant which reasonably indicates that a response is expected; receipt of a communication by an agent constitutes receipt by the principal;

(3) upon receipt of notification of a claim from a third-party, promptly provide necessary claim forms, instructions and assistance that is reasonable so that the third-party claimant is able to comply with any reasonable requirement;

(4) within 10 working days after notification of a claim received from or on behalf of an insured, give written acknowledgement to the insured, identifying the person handling the claim, including the person's name, mailing address, telephone number, the firm name, and the file number; notification of a claim to an agent constitutes notification to the principal.

(c) If notification of a claim is received in the form of a suit, a demand for arbitration, application for adjudication, or other pleading, any person transacting a business of insurance who participates in the investigation, adjustment, negotiation, or settlement of a claim shall comply with the rules of that particular forum rather than this section only so long as the claim is pending in that forum.

(d) This section does not apply to an insurance claim subject to AS 21.36.495 or other health insurance claim for which the insurer complies with AS 21.36.495 .

History: Eff. 5/6/89, Register 110; am 9/15/2004, Register 171; am 8/20/2016, Register 219

Authority: AS 21.06.090

AS 21.36.125

AS 21.36.495

Editor's note: In 2010 the revisor of statutes, acting under AS 01.05.031 , redesignated former AS 21.36.350 as AS 21.36.125 (c). As of Register 196 (January 2011), the regulations attorney made a conforming technical revision under AS 44.62.125 (b)(6), to the authority citation that follows 3 AAC 26.040, deleting the citation to former AS 21.36.350 to reflect that the authority citation already includes a citation to AS 21.36.125 , the section where material formerly in AS 21.36.350 was relocated.

3 AAC 26.050. Standards for prompt investigation of claims

(a) Any person transacting a business of insurance who participates in the investigation, adjustment, negotiation, or settlement of a claim shall promptly undertake the investigation of a claim after notification of the claim is received, and shall complete the investigation within 30 working days, unless the investigation cannot reasonably be completed using due diligence.

(b) Unless the notification of a claim is in the form of a suit, demand for arbitration, application for adjudication, or other pleading, or the claim becomes the subject of such litigation within 30 working days, the person transacting the business of insurance shall give written notification to the claimant that specifically states the need and reasons for additional investigative time and also specifies the additional time required to complete the investigation. That notification shall be given no later than the 30th working day after notification of the claim is first received.

(c) This section does not apply to an insurance claim subject to AS 21.36.495 or other health insurance claim for which the insurer complies with AS 21.36.495 .

History: Eff. 5/6/89, Register 110; am 9/15/2004, Register 171; am 8/20/2016, Register 219

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