Texas Life Agent Practice Exam

Which of the following is considered an unfair claims practice?

1. Fast processing of claims

2. Alteration of claim forms

3. Delaying claims without justification

4. Offering higher premiums

The correct answer is: Delaying claims without justification

Delaying claims without justification is considered an unfair claims practice because it violates the ethical and legal obligations of insurers to handle claims promptly and fairly. Insurers are expected to process claims in a timely manner, and undue delays can cause financial and emotional strain on policyholders who are relying on benefits. This practice undermines the trust between the insurance company and its clients, as it can be perceived as an attempt to avoid paying valid claims or to frustrate claimants into abandoning their claims. In contrast, the fast processing of claims is viewed as a positive practice that enhances customer satisfaction and fosters trust. Alteration of claim forms is unethical and structured to mislead or misrepresent information, which is altogether different but more related to misconduct than to the overarching realm of insurance claims processing. Offering higher premiums, while potentially causing consumer dissatisfaction, does not constitute an unfair claims practice as it pertains more to underwriting and pricing strategies, rather than the claims process.