20 CSR 100-1.050 - Standards for Prompt, Fair, and Equitable Settlement of Claims
PURPOSE: This amendment updates and clarifies standards for prompt, fair and equitable settlements regarding claims under health benefit plans, and clarifies how interest is applied to death benefit claims. This amendment also updates language regarding estimates as stated in the NAIC model.
PURPOSE: This rule effectuates or aids in the interpretation of sec tions 375.1007(3) and 375.1007(4), RSMo.
(1) Standards for Prompt, Fair, and Equitable
Settlements Applicable to All Insurers, (excluding electronically submitted
claims under health benefit plans subject to sections
376.383
to
376.384,
RSMo).
(A) Within fifteen (15) working days
after the submission of all forms necessary to establish the nature and extent
of any claim, the first-party claimant shall be advised of the acceptance or
denial of the claim by the insurer. No insurer shall deny any claim on the
grounds of a specific policy provision, condition or exclusion unless reference
to that provision, condition or exclusion is included in the denial. The denial
must be given to the claimant in writing and the claim file of the insurer
shall contain a copy of the denial.
(B) If a claim is denied for reasons other
than those described in subsection (1)(A), an appropriate notation shall be
made in the claim file of the insurer.
(C) If the insurer needs more time to
determine whether a claim should be accepted or denied, it shall so notify the
first-party claimant within the time otherwise allotted for acceptance or
denial, giving the reasons more time is needed. If the investigation remains
incomplete, the insurer, within forty-five (45) days from the date of the
initial notification and every forty-five (45) days after, shall send the
claimant a letter setting forth the reasons additional time is needed for
investigation.
(D) No insurer shall
fail to settle any first-party claim on the basis that responsibility for
payment should be assumed by others except as otherwise may be provided by
policy provisions.
(E) No insurer
shall continue negotiations or settlement of any claim directly with a claimant
who is neither an attorney nor represented by an attorney until the claimant's
rights may be affected by a statute of limitations or a policy time limit,
without giving the claimant written notice that the time limit may be expiring
and may affect the claimant's rights. The notice shall be given to first-party
claimants thirty (30) days and to third-party claimants sixty (60) days before
the date on which the time limit may expire.
(F) No insurer shall make any statement which
indicates that the rights of a third-party claimant may be impaired if a form
of release is not completed within a given period of time unless the statement
is given for the purpose of notifying the third-party claimant of the provision
of a statute of limitations.
(G)
All insurers offering cash settlements of first-party long-term disability
income claims shall develop a present value calculation of future benefits
utilizing contingencies, such as mortality, morbidity, and interest rate
assumptions, etc., appropriate to the risk. A copy of the amount so calculated
shall be given to the insured and signed by him/her at the time a settlement is
entered into, and a copy of the amount with the calculations shall be given to
the insured at the time the insured is first approached regarding settlement.
This acknowledgment of advice of probable value of the contract, together with
a copy of the calculations used to arrive at the amount, shall be maintained in
the claim file whenever a cash settlement is accepted by the insured. This
regulation does not apply to the settlement of liability insurance claims or
structured settlements made in settlement of liability insurance claims. The
furnishing of a present value calculation to an insured is not construed to
imply or impose any liability on the insurer.
(H) shall include interest at nine percent
(9%) per annum, unless another rate has been agreed upon, from the date of
death of the insured until the date the claim is paid. For death benefit claims
on all life insurance policies, consistent with section
408.020,
interest accrues at the rate of nine percent (9%) per annum, unless a different
interest rate is specified in the policy, from the date of death of the insured
until the date the claim is paid if the insurer fails to pay the policy
proceeds within thirty (30) days of submission of proof of death and receipt of
all necessary proofs of loss. Interest at the same rate continues to accrue on
any unpaid interest not included with the death benefit payment.
(2) Standards for Prompt, Fair,
and Equitable Settlements Applicable to Automobile Insurance.
(A) Where liability and damages are
reasonably clear, insurers shall not recommend that third-party claimants make
claim under their own policies to avoid paying claims under the insurer's
insurance policy or insurance contract.
(B) Insurers shall not require a claimant to
travel unreasonably either to inspect a replacement automobile, to obtain a
repair estimate or to have the automobile repaired at a specific repair
shop.
(C) Insurers, upon the
claimant's request, shall include the first-party claimant's deductible, if
any, in subrogation demands. Subrogation recoveries shall be shared on a
proportionate basis with the first-party claimants, unless the deductible
amount has been otherwise recovered. No deduction for expenses can be made from
the deductible recovery unless an outside attorney is retained to collect this
recovery. The deduction may then be for only a pro rata share
of the allocated loss adjustment expense.
(D) Estimates.
1. If an insurer prepares an estimate of the
cost of automobile repairs, the estimate shall be in an amount for which it may
be reasonably expected the damages can be satisfactorily repaired. The insurer
shall give a copy of the estimate to the claimant and may furnish to the
claimant the names of one (1) or more conveniently located repair
shops.
2. No insurer may prepare an
estimate, except an estimate prepared at the insured's request by a person or
entity having no contractual relationship with the insurer, of the cost of
automobile repairs based on the use of an after-market part, unless each of the
following conditions are met:
A. The insurer
discloses to the claimant in writing, either on the estimate or in a separate
document attached to the estimate, the following information in no smaller than
ten- (10-) point type: "This estimate has been prepared based on the use of an
automobile part(s) not made by the original equipment manufacturer. Parts used
in the repair of your vehicle by other than the original manufacturer are
required to be at least equal in kind and quality in terms of fit, quality, and
performance to the original manufacturer parts they are replacing." All
after-market parts installed on the vehicle shall be clearly identified on the
repair estimate;
B. No insurer
shall require the use of after-market parts in the repair of an automobile
unless the after-market part is at least equal in kind and quality to the
original part in terms of fit, quality, and performance. Insurers specifying
the use of after-market parts shall consider the cost of any modifications
which may become necessary when making the repair; and
C. All after-market parts, which are subject
to this regulation and manufactured after October 31, 1991, shall carry
sufficient permanent identification so as to identify its manufacturer, with
the identification being accessible to the extent possible after
installation.
3.
Definitions.
A. Insurer includes any person
authorized to represent the insurer with respect to a claim and who is acting
within the scope of the person's authority.
B. After-market part, for purposes of this
regulation, means sheet metal or plastic parts which generally constitute the
exterior of a motor vehicle, including inner and outer panels, not made by the
original equipment manufacturer.
(E) When the amount claimed is reduced
because of betterment or depreciation, all information for the reduction shall
be contained in the claim file. These reductions shall be itemized and
appropriate in amount.
(F) When the
insurer elects to repair and designates a specific repair shop for automobile
repairs, the insurer shall cause the damaged automobile to be restored to its
condition prior to the loss at no additional cost to the claimant other than as
stated in the policy and within a reasonable period of time.
(G) The insurer shall not use as a basis for
cash settlement with a first-party claimant an amount which is less than the
amount which the insurer would pay if repairs were made, other than in total
loss situations, unless the amount is agreed to by the
insured.
(3) Standards
for Prompt, Fair, and Equitable Settlements Applicable to Health Insurance.
(A) Precertification. An insurer may require
that claimants for health insurance benefits have their course of treatment
certified in advance of incurring the claim based upon the course of treatment,
so long as the following conditions are met:
1. The rules of the insurer for
precertification are fully disclosed to the covered person in advance of any
incurred claim or course of treatment; and
2. Precertification determinations are made
in a prompt, fair, and equitable manner.
(B) Denial of Precertified Claims.
1. No insurer may deny, in whole or in part,
any claim for health insurance benefits if-
A.
The claim is based upon a course of treatment which has been precertified;
and
B. The claim denial is based
upon one (1) or more of the following reasons:
(I) The claim or course of treatment was not
medically necessary; or
(II) The
claim or course of treatment was experimental.
2. The provisions of paragraph (3)(B)1. of
this rule do not apply to any claim against an insurer which has a contract-
A. With the health care provider who provided
the treatment upon which the claim is based; and
B. Which provides that the health care
provider will hold the insured harmless from the denial of the claim.
(4) Standards
for Prompt Investigations of Claims. Every insurer shall complete an
investigation of a claim within thirty (30) days after notification of the
claim, unless the investigation cannot reasonably be completed within this
time.
Notes
*Original authority: 374.045, RSMo 1967, amended 1993, 1995 and 375.1000-375.1018, see RSMo 2000 and RSMo Supp. 2007.
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