State RegulationsPA specificDifficulty 3/5
Which statement most accurately describes how Pennsylvania regulates unfair claim settlement practices?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Pennsylvania regulates unfair claims practices on two levels. The statute, 40 P.S. § 1171.5(a)(10), designates unfair claims settlement practices as an unfair trade practice. The operational deadlines — acknowledgment within 10 working days, investigation within 30 days, written status every 45 days — live in 31 Pa. Code Ch. 146, and the Pennsylvania Insurance Department enforces them through its supervisory and consent-order process. Knowing which layer carries which rule is a classic exam distinction.
Why the other options are wrong
- B) Claim-handling regulation is a state function under 40 P.S. § 1171.5(a)(10) and 31 Pa. Code Ch. 146, not an exclusively federal scheme.
- C) Internal manuals cannot override the department's regulations; insurers remain bound by 31 Pa. Code Ch. 146.
- D) The primary obligations fall on insurers, the parties that settle claims; producers face separate conduct rules.
Memory hook
Statute names the sin; the regulations set the clocks; the department enforces both.