Arkansas Life and Health Insurance Practice Exam

Which of the following is not considered an unfair claims practice?

1. Denying claims without conducting an investigation

2. Delaying claim payments unreasonably

3. Making claim payments without conducting an investigation

4. Refusal to pay claims without a valid reason

The correct answer is: Denying claims without conducting an investigation

Denying claims without conducting an investigation is not considered an unfair claims practice because insurance companies have the right to deny claims that are not valid or covered by the policy. However, it is important for the insurance company to conduct a thorough investigation before making a decision on a claim. This ensures fairness to the policyholders and protects against potential errors or oversights. Delaying claim payments unreasonably, making claim payments without conducting an investigation, and refusing to pay claims without a valid reason are all considered unfair claims practices as they can harm policyholders by causing undue financial strain or denying them the coverage they are entitled to under the policy.