Which one of the following is not an unfair claims settlement practice?

Providing promptly a reasonable explanation of the basis for denial of a claim or for the offer of a compromise settlement is not considered an unfair claims settlement practice because it aligns with the standard expectations of transparency and fairness in insurance operations. Insurers are required to communicate clearly and effectively with policyholders regarding the reasons for their decisions, whether those involve the denial of a claim or an offer to settle. This practice promotes trust and integrity in the insurance process, ensuring that policyholders understand the rationale behind the insurer’s actions.

Unfair claims settlement practices typically involve actions that are deceptive, unjust, or lack a reasonable basis. Refusing to pay a valid claim without a reasonable basis undermines the duty of an insurer to act in good faith and can lead to legal repercussions. Similarly, failing to acknowledge a claim within a reasonable time can delay resolution and create unnecessary frustration for the claimant, reflecting poor customer service and potential bad faith. Misrepresenting pertinent facts or policy provisions deceives the policyholder and violates ethical standards in claims handling.

By promptly explaining decision-making, an insurer upholds ethical responsibilities and establishes a constructive dialogue with its clients, distinguishing it from the unfair practices highlighted in the other options.