Thursday, March 26, 2009

Superior Court holds that insurer's demand for release of 93A/176D claim in exchange for settling underlying case violates 176D

In last month's Superior Court decision in Sterlin v. Commerce Insurance Company the insurer, Commerce, made an offer to settle of an automobile accident claim contingent upon receiving a release of its own liability for violation of Mass. Gen. Laws ch. 93A and 176D.

Judge Tucker held that such an offer was in itself a violation of those statutes. He wrote, "By seeking a release of itself upon the payment of its insured's benefits to the claimants, Commerce was in effect seeking to have the insurance coverage afforded to its insured, Mukesh Patel, cover its own liability to plaintiff for any statutory violations. Although the statute does not specifically define such actions as unfair claims settlement practices, it does set forth in § 3(9)(m) that it is a violation and an unfair claims settlement practice by 'failing to settle claims promptly . . . under one portion of the insurance policy coverage in order to influence settlements under other potions of the insurance policy coverage.' In a like manner, this court believes that an insurer's attempt to settle its own claims against itself by the payment of its insured's liability benefits is likewise a violation of the statute and an unfair or deceptive act or practice under G.L.c. 93A."

1 comment:

Anonymous said...

Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss.
Basically it means as a equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of as a guaranteed small loss to prevent a large, possibly devastating loss.the insurer is the company who is selling the insurance policy and the insured is the person who takes that policy.The insurance rate is a factor used to determine the amount to be charged for a certain amount of insurance coverage, called the premium.there are various types of insurance such as:-

1. house insurance

2. car insurance

3.human insurance called as medicare insurance
and so on.

i mean to say that at present world atleast in all fields the insurance companies will provides this insurance facility to secure our property in the cricis.the insurance also protects our spent money in some field by providing their required amount of our damage property.if we claim for our damage property the insurance company will provide the required price of that property at present's property i am talking about it covers all those things for which we takes the insurance policies.

here below i tell you about some losses and their premium and how the losses are calculated, so take a look on that:-
# Definite Loss. The event that gives rise to the loss that is subject to the insured, at least in principle, take place at a known time, in a known place, and from a known cause. The classic example is death of an insured person on a life insurance policy. Fire, automobile accidents, and worker injuries may all easily meet this criterion. Other types of losses may only be definite in theory. Occupational disease, for instance, may involve prolonged exposure to injurious conditions where no specific time, place or cause is identifiable. Ideally, the time, place and cause of a loss should be clear enough that a reasonable person, with sufficient information, could objectively verify all three elements.
# Accidental Loss. The event that constitutes the trigger of a claim should be fortuitous, or at least outside the control of the beneficiary of the insurance. The loss should be ‘pure,’ in the sense that it results from an event for which there is only the opportunity for cost. Events that contain speculative elements, such as ordinary business risks, are generally not considered insurable.
# Large Loss. The size of the loss must be meaningful from the perspective of the insured. Insurance premiums need to cover both the expected cost of losses, plus the cost of issuing and administering the policy, adjusting losses, and supplying the capital needed to reasonably assure that the insurer will be able to pay claims. For small losses these latter costs may be several times the size of the expected cost of losses. There is little point in paying such costs unless the protection offered has real value to a buyer.
# Affordable Premium. If the likelihood of an insured event is so high, or the cost of the event so large, that the resulting premium is large relative to the amount of protection offered, it is not likely that anyone will buy insurance, even if on offer. Further, as the accounting profession formally recognizes in financial accounting standards, the premium cannot be so large that there is not a reasonable chance of a significant loss to the insurer. If there is no such chance of loss, the transaction may have the form of insurance, but not the substance. (See the U.S. Financial Accounting Standards Board standard number 113)
# Calculable Loss. There are two elements that must be at least estimable, if not formally calculable: the probability of loss, and the attendant cost. Probability of loss is generally an empirical exercise, while cost has more to do with the ability of a reasonable person in possession of a copy of the insurance policy and a proof of loss associated with a claim presented under that policy to make a reasonably definite and objective evaluation of the amount of the loss recoverable as a result of the claim.