Washington Life Producer Practice Exam

Which of the following is an example of an unfair claims practice?

1. Providing clear explanations about the claims process

2. Withholding payment without proper investigation

3. Offering reasonable settlement options

4. Communicating effectively with clients

The correct answer is: Withholding payment without proper investigation

Withholding payment without proper investigation is indeed an example of an unfair claims practice. This action violates the ethical standards and regulations governing insurance claims because it denies policyholders the timely and fair access to the benefits they have paid for. Insurers are required to conduct thorough and timely investigations into claims to ensure that decisions are justified and based on the facts surrounding the claim. Failing to do so not only undermines the trust placed in the insurance system but may also result in financial harm to the claimant, as they may face delays or denials of legitimate claims. This practice disregards the duty of the insurer to treat their customers fairly and squarely violates the principle of good faith that should govern the insurer-policyholder relationship.