Massachusetts Life Producer Practice Exam

Which of these is NOT an Unfair Claims Settlement Practice?

1. Delaying payment without justification

2. Refusing to pay persons bringing false or fraudulent claims

3. Failing to provide a reason for claim denial

4. Offering low settlement amounts without proper evaluation

The correct answer is: Refusing to pay persons bringing false or fraudulent claims

Refusing to pay persons bringing false or fraudulent claims is not considered an unfair claims settlement practice. In fact, insurers have a duty to deny claims that are found to be fraudulent, as they are protecting themselves and their policyholders from losses that arise from dishonest behavior. Accepting fraudulent claims undermines the integrity of the insurance system and could lead to higher costs for all policyholders. Unfair claims settlement practices are typically defined as actions that unnecessarily delay the claims process, deny legitimate claims without sufficient grounds, or settle under unreasonable terms. These actions can be detrimental to the insured who depend on timely and fair treatment after they’ve experienced a loss.