SB 177: "An Act relating to insurance trade practices; and providing for an effective date."

00SENATE BILL NO. 177 01 "An Act relating to insurance trade practices; and providing for an effective 02 date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. SHORT TITLE. This Act may be known as the Alaska Insurance Consumers 05 Protection Act. 06 * Sec. 2. AS 21.36.010 is amended to read: 07  Sec. 21.36.010. Purpose. The purpose of this chapter is to regulate an act or 08 a trade practice [PRACTICES] in the business of insurance in accordance with the 09 intent of Congress as expressed in 15 U.S.C. 1011 - 1015 (McCarran-Ferguson Act) 10 [THE ACT OF CONGRESS OF MARCH 9, 1945 (P.L. 79-15; CH. 20, 59 STAT. 11 33),] by defining or providing for determination of all the practices in this state that 12 constitute an unfair method [METHODS] of competition or an unfair or deceptive act 13 or practice [ACTS OR PRACTICES] and by prohibiting them. 14 * Sec. 3. AS 21.36.020 is amended to read:

01  Sec. 21.36.020. Unfair methods, deceptive acts prohibited. A person may 02 not engage in an act or a trade practice in this state or relative to a subject resident, 03 located, or to be performed in this state that is defined in this chapter as, or determined 04 under this chapter to be, an unfair method of competition or an unfair or deceptive act 05 or practice in the business of insurance. 06 * Sec. 4. AS 21.36.070(b) is amended to read: 07  (b) A person providing the director with information concerning the financial 08 condition or an act or a practice [PRACTICES] of a licensee of the division is 09 immune from liability for defamation. 10 * Sec. 5. AS 21.36.125 is amended to read: 11  Sec. 21.36.125. Unfair claim settlement practices. A person may not commit 12 [OR ENGAGE IN WITH SUCH FREQUENCY AS TO INDICATE A PRACTICE] 13 any of the following acts or practices: 14  (1) misrepresent facts or policy provisions relating to coverage of an 15 insurance policy; 16  (2) fail to acknowledge and act promptly upon communications 17 regarding a claim arising under an insurance policy; 18  (3) fail to adopt and implement reasonable standards for prompt 19 investigation of claims; 20  (4) refuse to pay a claim without a reasonable investigation of all of 21 the available information and an explanation of the basis for denial of the claim or for 22 an offer of compromise settlement; 23  (5) fail to affirm or deny coverage of claims within a reasonable time 24 of the completion of proof-of-loss statements; 25  (6) fail to attempt in good faith to make prompt and equitable 26 settlement of claims in which liability is reasonably clear; 27  (7) compel an insured or third-party claimant [INSUREDS] to 28 litigate for recovery of an amount [AMOUNTS] due under an insurance policy 29 [POLICIES] by offering substantially less than an amount [THE AMOUNTS] 30 ultimately recovered in an action [ACTIONS] brought by the insured or third-party 31 claimant [THOSE INSUREDS];

01  (8) attempt to make an unreasonably low settlement by reference to 02 printed advertising matter accompanying or included in an application; 03  (9) attempt to settle a claim on the basis of an application that has been 04 altered without the consent of the insured; 05  (10) make a claims payment without including a statement of the 06 coverage under which the payment is made; 07  (11) make known to an insured or third-party claimant [INSUREDS 08 OR CLAIMANTS] a policy of appealing from an arbitration award [AWARDS] in 09 favor of an insured or third-party claimant [INSUREDS OR CLAIMANTS] for the 10 purpose of compelling the insured or third-party claimant [THEM] to accept a 11 settlement or compromise [SETTLEMENTS OR COMPROMISES] less than the 12 amount awarded in arbitration; 13  (12) delay investigation or payment of claims by requiring submission 14 of unnecessary or substantially repetitive claims reports and proof-of-loss forms; 15  (13) fail to promptly settle claims under one portion of a policy for the 16 purpose of influencing settlements under other portions of the policy; 17  (14) fail to promptly provide a reasonable explanation of the basis in 18 the insurance policy in relation to the facts or applicable law for denial of a claim or 19 for the offer of a compromise settlement; or 20  (15) offer a form of settlement or pay a judgment in any manner 21 prohibited by AS 21.89.030. 22 * Sec. 6. AS 21.36 is amended by adding a new section to read: 23  Sec. 21.36.212. Prohibited denial of claim for causation. An insurer may 24 not deny a claim if a risk, hazard, or contingency insured against is the dominant cause 25 of a loss and the denial occurs because an excluded risk, hazard, or contingency is also 26 in a chain of causes but operates on a secondary basis. 27 * Sec. 7. This Act takes effect January 1, 2000.