Professional Standards & Ethics Flashcards

Under the NAIC Unfair Claims Settlement Practices Model Act, which practice is considered unfair when committed with such frequency as to indicate a general business practice?

Answer: Compelling insureds to litigate by offering substantially less than amounts ultimately recovered

Lowball offers that force insureds to sue to recover amounts due are expressly listed as unfair claims settlement practices.

An adjuster's brother-in-law owns the body shop where a claimant wants repairs done. What is the most ethical course of action?

Answer: Disclose the relationship to the supervisor and request reassignment or oversight

Conflicts of interest should be disclosed promptly so the insurer can manage them transparently.

Which federal law requires financial institutions, including insurers, to provide privacy notices and protect consumers' nonpublic personal information?

Answer: Gramm-Leach-Bliley Act

The Gramm-Leach-Bliley Act imposes privacy notice and safeguarding requirements on financial institutions, including insurers.

Most state fair claims regulations require an insurer to acknowledge receipt of a claim notice within roughly what time frame?

Answer: 15 days

Many states based on the NAIC model regulation require acknowledgment within about 15 days, though exact deadlines vary by state.

A vendor offers an adjuster free tickets to a professional sports game after the adjuster refers several claims to them. What should the adjuster do?

Answer: Decline or follow the company's gift policy, as acceptance creates an appearance of impropriety

Accepting gifts from vendors tied to referrals creates a real or perceived conflict and generally violates gift policies.

An adjuster has a reasonable belief that a claim is fraudulent. In most states, what is the adjuster's obligation?

Answer: Report the suspected fraud to the insurer's SIU or the state fraud bureau as required

Most states require suspected fraud to be reported to the insurer's special investigations unit or the state fraud bureau.

Which statement best describes the duty of good faith and fair dealing in first-party claims?

Answer: It is implied in every insurance contract and requires the insurer to give at least equal consideration to the insured's interests

The covenant of good faith and fair dealing is implied in every insurance contract by law.