The NAIC model act specifies that its provisions regarding bad-faith claims are to be enforced by which entity?

The NAIC model act specifies that its provisions regarding bad-faith claims are to be enforced by which entity?

• A. State insurance departments.
• B. The Federal Trade Commission.
• C. NAIC personnel.
• D. Insurer personnel, on the honor system.

Answer: (A)

Enforcement of bad-faith provisions in NAIC model acts is carried out by state insurance departments. The NAIC develops model laws to guide regulation, but it doesn’t enforce them itself. Each state’s regulator, typically the department of insurance, has the authority to investigate claims practices, enforce compliance, and impose penalties or license actions when insurers mishandle claims. The Federal Trade Commission handles broader federal consumer protection issues, not the enforcement of NAIC model acts. NAIC staff do not enforce these provisions, and insurer personnel aren’t the enforcement body—regulation comes from the state regulator under applicable state law. This structure allows consistent standards across states while letting regulators address local needs.

Enforcement of bad-faith provisions in NAIC model acts is carried out by state insurance departments. The NAIC develops model laws to guide regulation, but it doesn’t enforce them itself. Each state’s regulator, typically the department of insurance, has the authority to investigate claims practices, enforce compliance, and impose penalties or license actions when insurers mishandle claims. The Federal Trade Commission handles broader federal consumer protection issues, not the enforcement of NAIC model acts. NAIC staff do not enforce these provisions, and insurer personnel aren’t the enforcement body—regulation comes from the state regulator under applicable state law. This structure allows consistent standards across states while letting regulators address local needs.