Arkansas

We put Unfair Claims Practices, Unfair Trade Practices along with the regulation for 3rd Parties on top and organized all other laws alphabetically to make it easier for you to find a particular law or regulation. To get to a particular topic on this page you can either click on it in the table of contents or scroll down. To get back to the table of contents simply click on the link that says back to top beneath each section.

Unfair Claims Practices Act

The following are defined as unfair methods of competition and unfair or deceptive acts or practices in the business of insurance:

(1) "Boycott, coercion, and intimidation" are entering into any agreement to commit or, by any concerted action, committing any act of boycott, coercion, or intimidation resulting in or tending to result in unreasonable restraint of, or monopoly in, the business of insurance;

(2) "Churning of business" is wherein the licensee replaces an existing policy of life insurance or accident and health insurance, or both, and that replacement is not in accordance with § 23-66-307 or that replacement is without objective demonstration by the licensee of the purpose of replacing the policy for the benefit and betterment of the insured;

Unfair Trade Practices Act

23-66-206. Unfair methods of competition and unfair or deceptive acts or practices defined.

The following are defined as unfair methods of competition and unfair or deceptive acts or practices in the business of insurance:

(1) "Boycott, coercion, and intimidation" are entering into any agreement to commit or, by any concerted action, committing any act of boycott, coercion, or intimidation resulting in or tending to result in unreasonable restraint of, or monopoly in, the business of insurance;

(2) "Churning of business" is wherein the licensee replaces an existing policy of life insurance or accident and health insurance, or both, and that replacement is not in accordance with § 23-66-307 or that replacement is without objective demonstration by the licensee of the purpose of replacing the policy for the benefit and betterment of the insured;

(3) "Defamation" is making, publishing, disseminating, or circulating, directly or indirectly, or aiding, abetting, or encouraging the making, publishing, disseminating, or circulating of any oral or written statement or of any pamphlet, circular, article, or literature which is false or maliciously critical of or derogatory to the financial condition of any person and which is calculated to injure that person;

(4) "Failure to maintain complaint handling procedures" is failing to adopt and implement reasonable standards for the prompt handling of complaints received by the person from insureds or claimants, or from the Insurance Commissioner on behalf of insureds or claimants, and failing to keep a record thereof. A complete complaints register of all complaints which the person has received since the date of its last examination shall be maintained. This complaints register shall indicate the total number of complaints, their classification by line of insurance, the nature of each complaint, the disposition of those complaints, the time it took to process each complaint, and such other information as the commissioner may reasonably require by way of regulations. For purposes of this subdivision (4), "complaint" shall mean any written communication primarily expressing a grievance;

(5) "Failure to maintain conflict of interest procedures" is failing to adopt and implement on or before the next financial or market conduct examination conducted by the commissioner on and after passage of this act and thereafter maintain written conflict of interest procedures and provisions, in form and format satisfactory to the commissioner, designed to identify and resolve promptly any general or pecuniary conflicts of interest as to officers, directors, managers, supervisors, and other key personnel of domestic insurers, including, but not limited to, domestic stock and mutual insurers, domestic stipulated premium insurers, domestic mutual assessment life and disability insurers, domestic health maintenance organizations, domestic farmers' mutual aid associations, domestic hospital or medical service corporations, and domestic fraternal benefit societies;

(6) "False information and advertising generally" is making, publishing, disseminating, circulating, or placing before the public or causing, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public in a newspaper, magazine, or other publication or in the form of a notice, circular, pamphlet, letter, or poster or over any radio or television station or in any other way an advertisement, announcement, or statement containing any assertion, representation, or statement with respect to the business of insurance or with respect to any person in the conduct of his or her insurance business which is untrue, deceptive, or misleading;

(7) "False statements and entries" are:

(A) Filing with any supervisory or other public official or making, publishing, disseminating, circulating, or delivering to any person, or placing before the public or causing, directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public any false statement of financial condition of a person with intent to deceive; and

(B) Knowingly making any false entry of a material fact in any book, report, or statement of any person or knowingly omitting to make a true entry of any material fact pertaining to the business of the person in any book, report, or statement of that person;

(8) "Misrepresentation and false advertising of insurance policies" is making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustrations, circular, statement, sales presentation, omission, or comparison, which:

(A) Misrepresents the benefits, advantages, conditions, or terms of any insurance policy;

(B) Misrepresents the dividends or share of the surplus to be received on any insurance policy;

(C) Makes any false or misleading statements to the dividends or share of surplus previously paid on any insurance policy;

(D) Is misleading or is a misrepresentation as to the financial condition of any person or as to the legal reserve system upon which any life insurer operates;

(E) Uses any name or title of any insurance policy or class of insurance policies, misrepresenting the true nature thereof;

(F) Is a misrepresentation for the purpose of inducing or tending to induce the lapse, forfeiture, exchange, conversion, or surrender of any insurance policy;

(G) Is a misrepresentation for the purpose of effectuating a pledge or assignment of or effecting a loan against any insurance policy; or

(H) Misrepresents any insurance policy as being shares of stock;

(9)(A) "Policy cancellations" are cancellations of insurance coverage on a property or casualty risk which has been in force over sixty (60) days or after the effective date of a renewal policy or an annual anniversary date, unless the cancellation is based upon at least one (1) of the following reasons:

(i) Nonpayment of premium;

(ii) Fraud or material misrepresentation made by or with the knowledge of the named insured in obtaining the policy, continuing the policy, or in presenting a claim under the policy;

(iii) The occurrence of a material change in the risk which substantially increases any hazard insured against after policy issuance;

(iv) Violation of any local fire, health, safety, building, or construction regulation or ordinances with respect to any insured property or the occupancy of the property, which substantially increases any hazard insured against under the policy;

(v) Nonpayment of membership dues in those cases where the bylaws, agreements, or other legal instruments of the insurer issuing the policy require payment as a condition of the issuance and maintenance of the policy; or

(vi) A material violation of a material provision of the policy.

(B) Cancellations of property and casualty policies shall only be effective when notice of cancellation is mailed or delivered by the insurer to the named insured and to any lienholder or loss payee named in the policy at least twenty (20) days prior to the effective date of cancellation. However, where cancellation is for nonpayment of premium, at least ten (10) days' notice of cancellation accompanied by the reason for cancellation shall be given.

(C) The provisions of subdivision (9) of this section shall not be applicable to any policy providing coverage for workers' compensation or employers' liability or to any policy providing coverage for personal automobile liability, automobile physical damage, or automobile collision, or any combination thereof;

(10) "Rebates" are:

(A) Except as otherwise expressly provided by law, defined as the act of knowingly permitting or offering to make or making any life, health, and annuity insurance contract, or agreement as to the contract, other than as plainly expressed in the insurance contract issued thereon; or paying or allowing, or giving, or offering to pay, allow, or give, directly or indirectly, as inducement to the insurance contract any rebate of premiums payable on the contract or any special favor or advantage in the dividends or other benefits thereon or any valuable consideration or inducement whatever not specified in the contract; or giving, selling, or purchasing or offering to give, sell, or purchase as inducement to the insurance contract or in connection with the contract any stocks, bonds, or other securities of any insurance company or other corporation, association, or partnership, or any dividends or profits accrued thereon; or anything of value whatsoever not specified in the insurance contract; but

(B) Nothing in subdivisions (10)(A) or (14) of this section shall be construed as including within the definitions of discrimination or rebates any of the following practices:

(i) In the case of any contract of life insurance or life annuity, the paying of bonuses to policyholders or otherwise abating their premiums in whole or in part out of surplus accumulated from nonparticipating insurance, provided that those bonuses or abatement of premiums shall be fair and equitable for policyholders and for the best interests of the company and its policyholders;

(ii) In the case of life insurance policies issued on the industrial debit plan, making allowance to policyholders who have continuously for a specified period made premium payments directly to an office of the insurer in an amount which fairly represents the saving in collection expenses;

(iii) Readjustment of the rate of premium for a group insurance policy based on the loss or expense thereunder, at the end of the first or any subsequent policy year of insurance thereunder, which may be made retroactive only for the policy year;

(11) "Stock operations and advisory board contracts" are issuing or delivering or permitting agents, officers, or employees to issue or deliver agency company stock, or other capital stock or benefit certificates or shares in any common-law corporation, or securities or any special or advisory board contracts or other contracts of any kind which promise returns and profits as an inducement to insurance;

(12) "Underwriting: refusing certain risks" is refusing to issue or limiting the amount of coverage on a property or casualty risk based upon knowledge of an insurer's nonrenewal of the applicant's previous property or casualty policy or contract;

Update>> http://170.94.58.99/sdcodejul2002/lpext.dll?f=templates&fn=main-h.htm&2.0 and go to Title 4, Chapter 88 and Subchapter 1.

Deceptive and Unconscionable Trade Practices:
(a) Deceptive and unconscionable trade practices made unlawful and prohibited by this chapter include, but are not limited to, the following:
(1) Knowingly making a false representation as to the characteristics, ingredients, uses, benefits, alterations, source, sponsorship, approval, or certification of goods or services, or as to whether goods are original or new, or of a particular standard, quality, grade, style, or model;
(2) Disparaging the goods, services, or business of another by false or misleading representation of fact;
(3) Advertising goods or services with the intent not to sell them as advertised;
...
(5) The employment of bait-and-switch advertising, consisting of an attractive but insincere offer to sell a product or service which the seller in truth does not intend or desire to sell, evidenced by a refusal to show or disparagement of the advertised product, the requirement of a tie-in sale or other undisclosed conditions precedent to the purchase, demonstrating a defective product, or other acts demonstrating an intent not to sell the advertised product or services;
(6) Knowingly failing to identify flood, water, fire, or accidentally damaged goods as to such damages;
...
(8) Knowingly taking advantage of a consumer who is reasonably unable to protect his or her interest because of physical infirmity, ignorance, illiteracy, inability to understand the language of the agreement, or a similar factor;
...
(10) Engaging in any other unconscionable, false, or deceptive act or practice in business, commerce, or trade.
(b) The deceptive and unconscionable trade practices listed in this section are in addition to and do not limit the types of unfair trade practices actionable at common law or under other statutes of this state.

More>> http://170.94.58.99/sdcodejul2002/lpext.dll?f=templates&fn=main-h.htm&2.0 and go to Title 4, Chapter 88 and Subchapter 1.

Section 23-66; it's under 130 in Unfair and Deceptive Acts and Practices.
§ 10. Standards for prompt, fair and equitable settlements applicable to private passenger automobile insurance; Rule 43
(c) Insurers shall not require a claimant to travel an unreasonable distance to inspect a replacement automobile, to obtain a repair estimate, or to have the automobile repaired at a specific repair shop. Insurers shall not require a claimant to have the automobile repaired at a specific repair shop as a condition of recovery.

There is no regulation as to whether or not Caps are illegal in Arkansas and according to data collected by the Society for Collision Repair Specialists between 1995 and 1999 no complaints were received about insurers trying to limit what they would pay for a product, procedure or repair. However, according to the same data collected by SCRS 36 states had said caps are illegal.

We published a story on caps including a table with the data collected by SCRS in our February 2000 issue.

______________ Insurance Insured:

______________________ Claim #:

______________________ Vehicle ID:

Attn: Customer Service

In your repair appraisal of my vehicle, you limited paint/paint materials payment and/or related costs, such as refinish labor, to $___, while my cost is $___, or $___ more than you allow.

Your policy with me promises to restore my car to preloss condition at no cost other than the deductible my policy specifies. If I have to pay more than you allow for paint/materials and other costs, I will have to pay my deductible plus $___ before my car will be returned to me. Please tell me exactly where my policy says you may limit payments for paint/materials and other costs. If you can't, please authorize the full cost, $___, for all expenses.

If you don't authorize full pay and you can't show me where my policy says you may restrict payment, I shall report this incident to [State] Department of Insurance, stating that ____________ Insurance isn't honoring its promise to restore my vehicle to preloss condition at no cost other than the deductible as called for in the policy.

I look forward to your prompt response; I'd like my vehicle repaired as quickly as possible.

Sincerely, cc: Insurance Commissioner

Consumer Auto Repair Practices Acts
To the best of our knowledge and that of Arkansas’ Insurance Commission, Arkansas has no auto repair laws.

Consumer Protection Act
TO AMEND CERTAIN "MISCELLANEOUS PROHIBITED PRACTICES" PROVISIONS AND THE "INSURANCE SALES CONSUMER PROTECTION ACT."
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS:
SECTION 1. Arkansas Code 23-66-312 is amended to read as follows: 23-66-312. Favored agent or insurer - Coercion of debtors.
(a) No person, including, but not limited to, depository institutions and affiliates of depository institutions, primary and secondary mortgagees, vendors, or lenders may:
(1) Unreasonably disapprove the insurance policy or binder provided by a borrower for the protection of the property securing the credit or lien;
(2) Require, directly or indirectly, that any borrower, mortgagor, purchaser, insurer, broker, or agent pay a separate charge in connection with the handling of any insurance policy or binder required as security for a loan on real estate or pay a separate charge to substitute the insurance policy or binder of one (1) insurer for that of another; or

Diminished Value
§ 10. Standards for prompt, fair and equitable settlements applicable to private passenger automobile insurance; Rule 43

(g) When the amount claimed is reduced because of betterment or depreciation all information for such reduction shall be contained in the claim file. Such deductions shall be itemized and specified as to dollar amount and shall be appropriate for the amount of deductions.

Section 4-88-1; it starts at point 3 in Unfair Trade Practices.
(3) Advertising the goods or services with the intent not to sell them as advertised;
...
(5) The employment of bait-and-switch advertising, consisting of an attractive but insincere offer to sell a product or service which the seller in truth does not intend or desire to sell, evidenced by a refusal to show or disparagement of the advertised product, the requirement of a tie-in sale or other undisclosed conditions precedent to the purchase, demonstrating a defective product, or other acts demonstrating an intent not to sell the advertised product or services;

Section 23-66; it's under 8 E in Unfair and Deceptive Acts and Practices.
(8) "Misrepresentation and false advertising of insurance policies" is making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustrations, circular, statement, sales presentation, omission, or comparison, which:
(E) Uses any name or title of any insurance policy or class of insurance policies, misrepresenting the true nature thereof;

Home Services Act -- Section 23-66 Subchapter 4 (401-408)
Each insurer engaged in the home service system of distribution of policies in this state shall:

(1)(A) Establish written procedures to audit agencies engaged in the home service system of distribution of policies in this state;

(B) File the audit procedures in effect each year with the annual statement or provide a certification with each annual statement that the procedures have been adopted;

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Aftermarket Crash Parts
Whenever repairs are made involving replacement crash parts, as defined in this subchapter, and the vehicle is still under the manufacturer's original warranty, only original equipment manufacturer replacement crash parts may be used by the repair facility unless the owner gives or has given written consent otherwise.
(a) In all instances where nonoriginal equipment manufacturer aftermarket crash parts are used in preparing an estimate for repairs, the written estimate prepared by the insurer or repair facility shall clearly identify such parts.
(b) A disclosure document attached to the estimate shall contain the following information in no smaller than 10-point type:

License required Section 23-64 Subchapter 2 (201-232)
(a) No person shall in this state act as or hold himself or herself out to be an agent, broker, consultant, or adjuster, as to subjects of insurance located, resident, or to be performed in this state unless then licensed for that purpose pursuant to this chapter.

(b) No agent or broker shall solicit or take application for, procure, or place for others any kind of insurance as to which he or she is not then licensed.

(c) Except as specifically excepted in this chapter, no agent shall place any business with any insurer as to which he or she does not then hold an appointment as agent.

(d) No agent, insurer, broker, consultant, or adjuster shall permit any person not so properly licensed as provided in this chapter to solicit, engage, consult, or adjust in the business of insurance on its behalf.

(e) No person shall consult, counsel, or advise others on matters of insurance needs or coverages under any insurance policy or contract of insurance unless licensed under this chapter. Licensure of a salaried employee of the entity or entities for which they may consult or counsel on matters of insurance to that entity or entities shall not be required.

(f) No person may adjust claims as an adjuster without licensure under this chapter.

(g) Any license issued by the Insurance Commissioner may be immediately suspended as per § 9-14-239 for failure to pay child support.

(h) All licensees or applicants for licensure must notify the commissioner in writing within ten (10) days of any filing of a criminal charge or conviction or plea of a criminal charge or the filing of any bankruptcy proceeding by or against them. Failure to so notify the commissioner may result in the immediate suspension of the license.

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Regulation of Telephonic Sellers. -- Section 4-7-99

4-99-110. Soliciting prospective purchasers on behalf of unregistered telephonic seller prohibited - Violation.

(a) No salesperson shall solicit prospective purchasers on behalf of a telephonic seller who is not currently registered with the Consumer Protection Division pursuant to this chapter. Any salesperson who violates this section shall be guilty of a Class A misdemeanor.

(b) Except as provided in subsection (a) of this section, any person, including, but not limited to, the seller, a salesperson, agent or representative of the seller, or an independent contractor, who willfully violates any provision of this chapter or who directly or indirectly employs any device, scheme, or artifice to deceive in connection with the offer or sale by any telephonic seller, or who willfully, directly or indirectly engages in any act, practice, or course of business which operates or would operate as fraud or deceit upon any person in connection with a sale by any telephonic seller shall be, upon conviction, guilty of a Class D felony.

(c) Every person who controls a seller liable under this section, or a salesperson liable under subsection (a) of this section, every partner, officer, or director of such a seller or salesperson, every person occupying a similar status or performing a similar function, and every employee of such a seller or salesperson who materially aids in the sale or attempted sale are also liable jointly and severally with and to the same extent as the seller or salesperson, unless the nonseller or nonsalesperson who is so liable sustains the burden of proof that he or she did not know and in the exercise of reasonable care could not have known of the existence of the facts by reason of which the liability is alleged to exist. There is contribution as in cases of contract among the several persons so liable.

4-99-405. Prohibitions.

It shall be a violation of this subchapter for any person to:

(1) Make or transmit a telephone solicitation to the telephone number of any consumer included in the then-current database maintained by the Attorney General pursuant to this subchapter; or

(2) Make or transmit a telephone solicitation without having first accessed in the manner specified by the Attorney General the then-current database maintained by the Attorney General pursuant to this subchapter.

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Rule 43
§ 8. Standards for prompt investigation of claims
Every insurer shall complete investigation of a claim within forty-five (45) calendar days after notification of claim, unless such investigation cannot reasonably be completed within such time. If an investigation cannot be completed within the forty-five (45) day time period, insurers shall notify claimants that additional time is required and include with such notification the reasons therefore.

§ 9. Standards for prompt, fair and equitable settlements applicable to insurers
(a)(1) Within fifteen (15) working days after receipt by the insurer of properly executed proofs of loss, the first party claimant shall be advised of the acceptance or denial of the claim by the insurer. No insurer shall deny a claim on the grounds of a specific policy provision, condition, or exclusion unless reference to such provision, condition, or exclusion is included in the denial. The denial must be given to the claimant in writing and the claim file of the insurer shall contain a copy of the denial.

(2) If the insurer needs more time to determine whether a first party claim should be accepted or denied, it shall so notify the first party claimant in writing within fifteen (15) working days after receipt of the proofs of loss, stating the reasons more time is needed. If the investigation remains incomplete, the insurer shall, forty-five (45) calendar days from the date of the initial notification and not more than every forty-five (45) calendar days thereafter, send to such claimant a letter setting forth the reasons additional time is needed for investigation.

Rule 43
(f) Insurers shall mail or deliver claim checks or drafts to claimants within ten (10) working days after the claims are processed, all claim investigations are completed and said claim files are closed and ready for payment.

(g) No insurer or its agents and representatives shall fail to disclose fully to first party claimants all pertinent benefits, coverages or other provisions of an insurance policy or contract under which a claim is presented.

Total Losses
§ 10. Standards for prompt, fair and equitable settlements applicable to private passenger automobile insurance; Rule 43
(a) When the insurance policy provides for the adjustment and settlement of first party automobile total losses on the basis of actual cash value or replacement with another of like kind and quality, one (1) of the following methods must apply:

(1) The insurer may elect to offer a replacement automobile which is a specific comparable automobile available to the insured. All applicable taxes, license fees and other fees incident to transfer of evidence of ownership of the automobile must be paid at no cost to the insured other than the policy deductible. The offer and any rejection thereof must be documented in the claim file.
more>> http://www.state.ar.us/insurance/rulesandregs/legal_rnr43_2k.html#Standards

Sales Tax
TO: ALL LICENSED AUTOMOBILE, AND PROPERTY AND CASUALTY INSURERS, AND OTHER INTERESTED PARTIES
FROM: ARKANSAS INSURANCE DEPARTMENT
SUBJECT: PAYMENT OF SALES TAXES ON A TOTAL LOSS WHEN A FIRST PARTY CLAIMANT RETAINS SALVAGE
Questions have arisen related to an insurer’s obligation to pay a sales tax when a first party claimant elects to have an actual cash value (ACV) settlement and retain salvage on a vehicle which has been determined to be a total loss.
The Department refers the insurers and other interested parties to Arkansas Insurance Department Rule and Regulation 43 § 10 (a). Rule 43 § 10 (a) states:
(a) When the insurance policy provides for the adjustment and settlement of first party automobile total losses on the basis of actual cash value or replacement with another of like kind and quality, one (1) of the following methods must apply:

Amount of claim attributable to value and amount attributable to sales tax Section 23-89-211
(a) If an insurer settles a claim for damages to an automobile as a total loss, the insurer shall include with the payment an itemized list stating the amount attributable to the value of the automobile and the amount attributable to the sales tax on an automobile of that value.

(b) For the purposes of this section, the term "automobile" means a private passenger motor vehicle only.

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