New Hampshire Statutes
Governing Insurance Claim
Practices
Presented by:
Michael W. Wallenius
Getman, Schulthess & Steere, PA
Three Executive Park Drive Ste 9
Bedford, NH 03110
603-634-4300
Insurance Claim Practices Statutes
Overview

RSA 417 – Unfair Insurance & Claims Settlement Practices

RSA 400-A – Insurance Department Powers

RSA 358-A – N.H. Consumer Protection Act

The Dumas line of Cases
RSA 417
Prohibits Unfair Practices (RSA 417:3)

Lists Specific Practices that are Unfair


Penalty Imposed
Procedure for Identifying Unenumerated Unfair
Practices

Cease & Desist Order
RSA 417:4
RSA 417 specifically includes Adjusters as
those governed by its provisions
RSA 417
Enumerates Both:
 Unfair
Insurance Practices; and
 Unfair
Claims Settlement Practices
Enumerated Unfair
Insurance Practices
Examples:





Misrepresentation in Sale of Coverage
False Information in Advertising
Falsifying Information about Insurer’s Financial
Condition
Unfair Discrimination Offering Policies
Prohibition on Political Contributions
RSA 417:14
Enumerated Unfair Claims
Settlement Practices
Must be
“committed without just cause and not merely
inadvertently or accidently.”
RSA 417:4, XV (a) (1) – (14)
14 Enumerated Unfair Claims Settlement Practices
2 of them really are aimed at the company as not
the adjuster
Enumerated Unfair Claims
Settlement Practices

Knowingly misrepresenting pertinent facts or
policy provisions relating to coverage at issue
to a claimant or an insured;
RSA 417:4, XV (a) (1)
Enumerated Unfair
Claims Settlement Practices

Failing to acknowledge and act promptly upon
communications with respect to claims arising
under insurance policies
RSA 417:4, XV (a) (2)
Enumerated Unfair
Claims Settlement Practices

Not attempting in good faith to effectuate
prompt, fair and equitable settlements or
compromises of claims in which liability has
become reasonably clear
RSA 417:4, XV (a) (4)
Enumerated Unfair
Claims Settlement Practices

Compelling claimants to institute litigation to
recover amounts due under insurance policies
by offering substantially less than the amounts
ultimately recovered in actions brought by
them
RSA 417:4, XV (a) (5)
Enumerated Unfair
Claims Settlement Practices

Adopting or making known to insureds or
claimants a policy of appealing from
arbitration awards in favor of insureds or
claimants for the purpose of compelling them
to accept settlements or compromises less than
the amount awarded in arbitration
RSA 417:4, XV (a) (6)
Enumerated Unfair
Claims Settlement Practices

Attempting settlement or compromise of a
claim on the basis of an application which was
altered without notice to, or knowledge or
consent of the insured
RSA 417:4, XV (a) (7)
Enumerated Unfair
Claims Settlement Practices

Attempting to settle or compromise a claim
for less than the amount which the insured had
been led to believe the insured was entitled to
by written or printed advertising material
accompanying or made part of an application
RSA 417:4, XV (a) (8)
Enumerated Unfair
Claims Settlement Practices

Attempting to delay the investigation or
payment of claims by requiring an insured and
the insured's physician to submit a preliminary
claim report and then requiring the subsequent
submission of formal proof of loss forms,
both of which submissions contain
substantially the same information
RSA 417:4, XV (a) (9)
Enumerated Unfair
Claims Settlement Practices

Making any claim payment not accompanied
by a statement setting forth the benefits
included within the claim payment
RSA 417:4, XV (a) (10)
Enumerated Unfair
Claims Settlement Practices

Failing to affirm or deny coverage of claims
within a reasonable time after proof of loss
forms have been submitted
RSA 417:4, XV (a) (11)
Enumerated Unfair
Claims Settlement Practices

Refusing payment of a claim solely on the
basis of an insured's request to do so without
making an independent evaluation of the
insured's liability based upon all available
information
RSA 417:4, XV (a) (12)
Enumerated Unfair
Claims Settlement Practices

Knowingly underestimating the value of any
claim by an insurer or by an adjuster
representing the insurer
RSA 417:4, XV (a) (14)
Prohibited Practices for Auto Glass
Repairs – RSA 417:4, XX

Substantially the Same as Reg. 1002
Can’t steer business
 Cannot coerce claimant to use a specific repairer
 Claimant allowed to use own repair shop but must
pay increased cost
 Where there is a dispute with the shop as to cost of
repair, Insurance must provide name of a ready and
willing repairer

Enumerated Practices
Penalty

Loss of license

$2,500 fine per violation; OR

Pay consumer actual economic loss up to $2,500
per violation
→Consumer must waive right to sue.
UNDEFINED UNFAIR
PRACTICES
RSA 417:12, I
 Insurance
Department
 Has reason to believe
 A practice is unfair and deceptive
UNDEFINED UNFAIR
PRACTICES
RSA 417:12, I – Procedure:
 Show
cause hearing scheduled
 Which includes Insurance Departments plan
of action
 To be resulted by the insurer
UNDEFINED UNFAIR
PRACTICES
RSA 417:12, II - Department determines the
practice is unfair or deceptive then:
Issues a cease and desist order
 Subject to appeal to N.H. Supreme Court

UNDEFINED UNFAIR
PRACTICES

Violation of Cease & Desist Order – RSA
417:13.
Loss of license
 $2,500 fine per violation

Private Right of Action
RSA 417:19
Insurance Department as Gatekeeper (1)

If Insurance Department finds no violation


No suit may be filed
If Insurance Department takes no action or a
complaint after 120 days

no suit may be filed
Private Right of Action
RSA 417:21
Insurance Department as Gatekeeper (2)

Finding of violation by Insurance Department


Prima Facia evidence of a violation for civil suit
But not if finding is the result of a consent
agreement judgment entered into by the Insurer.
Private Right of Action
RSA 417:21

Double Recovery Prohibited
If same behavior constitutes a tort, breach of
contract and a violation of RSA Chapter 417 a
finding of a statutory violation does not permit
additional damages on top of tort or contract
damages
Private Right of Action
RSA 417:20

A Plaintiff who Prevails in Civil Suit for
Violation of RSA Chapter 417, in Addition to
Damages is Entitled to:
Reasonable Attorney Fees; and
 Costs of Suit

STATUTORY AUTHORITY OF
INSURANCE DEPARTMENT RSA
400-A

Broad Powers to Enforce Insurance Laws
Specifically granted
 Reasonably implied

STATUTORY AUTHORITY OF
INSURANCE DEPARTMENT
RSA 400-A


Conduct hearings and issue orders to enforce laws
Issue regulations
→violation = loss of license or $2,500 fine

Investigate to promote efficient administration of
insurance laws
→10 days to respond to Insurance Department request for
information

Can file suits to enforce laws.
Privileges Under RSA 400-A:16




Documents Produced by Order of the
Insurance Department cannot be subject to:
Subpoena
Civil Discovery
Admission in Evidence in a Civil Case
A Right-to-Know Statute Request
Privileges Under RSA 400-A:16
Additionally:

No Insurance Department Employee can be
forced to testify in a civil matter about
document contents; and

Production of documents does not result in a
waiver of privilege or confidentiality
Exceptions to Privilege Rule
RSA 400-A:16,10


Insurance Department can use documents to
enforce rules and take legal action
Provided confidentiality is protected the
Department can share documents with:
State, Fed & International Regulatory Agencies
 State, Fed and International Law Enforcement
 National Association of Insurance Commissioners

Exceptions to Privilege Rule
RSA 400-A:16,10

Can disclose documents to complaining party
If it will help explain Departments response to a
complaint
 Provided disclosure does not interfere with civil ,
criminal or administrative proceedings


Can disclose statistics about number and nature
of complaints filed with the Department
HEARINGS & APPEAL
RSA 400-a




Hearing may be held for any purpose within
scope of insurance law
Mandatory when required by statute
Mandatory upon written request of a person
aggrieved by an act or impending act
Request Deadline: 30 days after person knew or
should have known of the act in question
HEARINGS & APPEAL
RSA 400-a

Application for hearing must:
State why applicant is aggrieved
 State the Basis for Requested Relief


Statute or regulation
HEARINGS & APPEAL
RSA 400-a

Hearing to be held in 30 days if Department
finds application is
Timely
 Made in Good Faith
 Applicant would be aggrieved if his grounds are
established


Failure to hold hearing in 30 days = denied of
relief
HEARINGS & APPEAL
RSA 400-a
Appeal to NH Supreme Court
after Motion for Rehearing denied.
RSA Chapter 541
Consumer Service Division



Established by Reg Ins 102.08
Attempts to mediate disputes between insured
and carriers
Before matter is in litigation
N.H. Consumer Protection Act
Under Bell v. Liberty Mutual RSA Chapter
258-A does not apply to insurance carriers
because already subject to extensive
regulations.


No multiple damages
No shifting of costs or attorneys fees
Bad Faith Failure to Settle Within
Policy Limits
Dumas Line of Cases
Bad Faith Failure to Settle Within
Policy Limits
A.
Bad Faith Claims Based on Contract:
Under New Hampshire law, every party to a contract has
an implied obligation of good faith and fair dealing. If an
insured believes that the insurance company has failed to
settle or pay a claim covered under the insurance policy,
that insured may bring a first-party claim against the
insurance carrier for breach of the insurance contract.
Bursey v. Clement, 118 N.H. 412(1979);
Jarvis v. Prudential Ins. Co., 122 N.H. 648 (1982).
Bad Faith Failure to Settle Within
Policy Limits
An insurer's bad faith refusal to settle or pay a claim
pursuant to its contractual obligations does not give rise to
a tort action. Accordingly, if an insurer refused to settle or
pay a claim, even if acting in bad faith, the plaintiff will not,
for example, be able to recover for emotional distress.
Recovery in such instances is limited to the policy limits,
interest, and any unavoidable consequential damages the
plaintiff can prove.
A. B. C. Builders, Inc. v. American Mutual Ins. Co., 139 N.H. 745
(1995);
Lawton v. Great Southwest Fire Ins. Co., 118 N.H. 607, 613-614
(1978).
Bad Faith Failure to Settle Within
Policy Limits
1. In General:
Under New Hampshire law, a party may sue an insurance carrier for
failure to settle a claim against that party within the policy limits. New
Hampshire has specifically adopted a negligence standard-defined as
how a "reasonable person might act under the same circumstances."
An insurance carrier, therefore, has a duty to exercise due care in
ascertaining all of the facts of the case, both as to liability and damages
and in appraising the risk to the insured of being obliged to pay any
portion of a verdict in excess of policy limits.
Gelinas v. Metropolitan Prop. & Liability Inc. Co., 131 N.H. 154, 161 (1988);
Dumas v. Hartford Accident & Indemnity Co., 94 N.H. 484 (1947).
Bad Faith Failure to Settle Within
Policy Limits
2. A Question of Fact:
Whether an insurance company has acted in
good faith is a question of fact.
Gelinas v. Metro. Prop. & Liability Ins. Co., 131 N.H. 154, 160 (1988);
Lawton v. Greatsouthwest Fire Ins. Co., 118, N.H. 607, 612-13 (1978).
Bad Faith Failure to Settle Within
Policy Limits
3. Duty to Avoid Placing Insured Needlessly at Risk:
An insurance company should not shy away from defending cases it
believes it reasonably has a basis for defending. The insurer has a
reasonable right to try its case in court. It cannot, however, be "unduly
venturesome at the expense of the insured." The insurance company
must exercise the same caution that the ordinary person of average
prudence would employ under the circumstances. Stated otherwise,
"the duty an insurance company owes to its insured is to use
reasonable judgment in deciding whether to run the risk of an award in
excess of [the policy limits.]“
Dumas v. Hartford Accident & Indemnity Co., 94 N.H. 484, 489 (1947);
Dumas v. State Farm Mutual Automobile Ins. Co., 111 N. H. 43, 46-49 (1971).
Bad Faith Failure to Settle Within
Policy Limits
4. No Strict Liability for Failure to Settle
The New Hampshire Supreme Court has expressly
rejected the idea of holding an insurance carrier
strictly liable for failing to settle within the policy
limits.
Dumas v. State Farm Mutual Automobile Ins. Co., 111 N.H. 43, 46-49 (1971).
Bad Faith Failure to Settle Within
Policy Limits
5. The Insurance Company's Conflict
When the settlement value of a case approaches the policy
limits, the risk to the insurance company in taking the case
to trial increases. Accordingly, insurance carriers must give
more weight to the insured's interest as the settlement
value of the claim approaches the policy limits.
Dumas v. State Farm Mutual Automobile Ins. Co., 111 N.H. 43, 48 (1971).
Bad Faith Failure to Settle Within
Policy Limits
6. Bad Faith Claims By Third Parties
A third-party has no direct cause of action against the
insurance company for negligent failure to settle.
Duncan v. Lumbermen’s Mutual Cas. Co.
91 N.H. 349, 349 (1941)
However, tort claims are freely assignable, so third parties can
take assignments of any cause of action the insured might
have against the insurer.
Dumas v. State Farm Mutual Automobile Ins. Co., 111 N.H. 43, 48
(1971).
Bad Faith Failure to Settle Within
Policy Limits
7. Duty of Primary Carrier to Excess Carrier
A primary carrier owes no duty of care to and excess
carrier to settle a claim within the policy limits. However,
an excess carrier may pursue a Dumas claim against the
primary carrier based on an assignment clause in its policy.
A Dumas action based on such assignment is not barred
By the fact that the actual insured would suffer no financial
loss.
Allstate Ins. Co. v. Reserve Ins. Co., 116 N.H. 806, 808 (1977).
Malicious or “Bad Faith” Defense
New Hampshire recognizes the tort of malicious defense.
A defendant may be found liable for malicious defense if, in
defending a claim, he or she
 Acts without a credible basis in fact;
 Knowing the defense lacks merit;
 Primarily for a purpose other than securing the proper
adjudication of the claim;
 The previous proceeding terminated in favor of the party
bringing the malicious defense action; and
 Injury or damages have been sustained.
Aranson v. Schroeder, 140 N.H 359 (1995).
New Hampshire Statutes Governing
Insurance Claim Practices
The End
Getman, Schulthess & Steere, PA
Three Executive Park Drive Ste 9
Bedford, NH 03110
603-634-4300