Insurance Claims, Denials & Bad-Faith Accountability

INSURANCE CLAIMS, DENIALS & BAD-FAITH ACCOUNTABILITY

Insurance Claims and Bad-Faith Accountability

Insurance Companies Must Honor Covered Claims

Consumers pay premiums in exchange for coverage.

Insurance companies should investigate and pay valid covered claims in a timely manner.

Claim Deadlines

Insurers should operate under defined deadlines to:

• acknowledge a claim;

• request necessary information;

• investigate;

• approve or deny;

• pay approved amounts.

Delays should require legitimate documented reasons.

Written Denials

A denial should clearly identify:

• the specific policy language relied upon;

• factual basis;

• evidence considered;

• reason coverage does not apply;

• appeal procedure.

Generic or unexplained denials should not be sufficient.

Pay Undisputed Amounts

Where only part of a claim is disputed, the insurer should generally pay the clearly undisputed portion rather than withholding the entire claim.

Independent Appeals

Consumers should have access to meaningful independent review of serious claim disputes.

Healthcare disputes should include appropriate clinical review.

Property, casualty, disability, and other insurance disputes should have qualified independent review mechanisms where appropriate.

Bad-Faith Conduct

Reasonable disagreement over a genuinely uncertain claim should not automatically create liability.

However, enhanced penalties may apply where an insurer knowingly:

• denies clearly covered claims;

• intentionally delays payment without legitimate reason;

• materially misrepresents policy language;

• alters or suppresses claim evidence;

• systematically underpays valid claims;

• uses knowingly unreasonable claims practices.

Interest on Wrongfully Withheld Payments

Where an insurer improperly withholds money that should have been paid, interest should accrue from the date payment reasonably should have occurred.

Repeat Offenders

Regulators should track patterns of substantiated bad-faith claims handling.

Repeated violations may result in:

• enhanced penalties;

• market-conduct investigations;

• licensing consequences;

• mandated corrective action.

Insurance Claims

An insurer must acknowledge a claim within five business days, identify missing information promptly, and decide a complete ordinary claim within 15 business days. One documented 15-day extension may be used for a genuinely complex claim. Emergency health and safety claims require expedited handling. Approved amounts must be paid within five business days, and undisputed portions may not be withheld because another part remains disputed.

Healthcare Insurance Denials and Prior Authorization

• An insurer must acknowledge a complete prior-authorization request within one business day.

• Urgent requests involving a serious risk to life, health, function, or uncontrolled pain must receive a decision within 24 hours. Standard requests must receive a decision within three business days.

• If information is missing, the insurer must identify the missing item within one business day. The clock pauses only for information reasonably necessary to decide the request.

• A denial must identify the controlling policy provision, clinical rationale, evidence reviewed, reviewer credentials, and exact appeal procedure.

• A medical-necessity denial requires review by a licensed clinician with relevant specialty experience. An algorithm may assist but may not issue the final denial without accountable human review.

• Failure to decide within the deadline results in provisional approval, subject to later review for fraud or material omission.

• An urgent external appeal must be decided within 24 hours and a standard external appeal within five business days. Patients already receiving treatment receive at least 90 days of continuity during a plan or authorization transition unless continuing treatment would create a documented serious safety risk.

• Repeated unlawful denials, missed deadlines, falsified rationales, or interference with independent review may result in restitution, interest, civil penalties, corrective-action plans, and licensing consequences.

Related policies: Consumer Rights; Healthcare; Housing, Homeownership & HOA Reform; Government Integrity & Equal Justice.

Status: Proposed / Draft — not yet formally adopted.

Originally published: August 15, 2026.

Last updated: September 25, 2026.

Version: Draft 0.1.