Opinion ID: 1780555
Heading Depth: 1
Heading Rank: 2

Heading: Unfair Claims Settlement Practices As Declared by State Board of Insurance Regulations

Text: As the Vails note, section 16 of article 21.21 prohibits an insurer from engaging in practices declared to be unfair or deceptive by a rule or regulation of the State Board of Insurance. The Vails allege that Texas Farm engaged in practices declared to be unfair or deceptive by State Board of Insurance Board Order 18663, a regulation specifically adopted pursuant to article 21.21. State Bd. of Insurance, Board Order 18663, § 2 (now 28 Tex.Admin.Code § 21.2 (Hart 1986)). The Vails pleaded that Texas Farm engaged in conduct prohibited by section 4 of Board Order 18663, which reads: Sec. 4. UNFAIR TRADE PRACTICES PROHIBITED. (a) The misrepresentation of insurance policies, unfair competition, and unfair practices by insurers, agents and other connected persons are prohibited by Article 21.20 and Article 21.21 or by other provisions of the Insurance Code of Texas and by the rules and regulations of the State Board of Insurance. No person shall engage in this state in any trade practice that is a misrepresentation of an insurance policy, that is an unfair method of competition, or that is an unfair or deceptive act or practice as defined by the provisions of the Insurance Code of Texas or as defined by these or other rules and regulations of the State Board of Insurance authorized by the Code. (b) Irrespective of the fact that the improper trade practice is not defined in any other section of these Rules and Regulations, no person shall engage in this state in any trade practice which is determined pursuant by law to be an unfair method of competition or an unfair or deceptive act or practice in the business of insurance. State Bd. of Insurance, Board Order 18663, § 4 (now 28 Tex.Admin.Code § 21.3) (Hart 1986) (emphasis added). Section 4 thus permits an insured to recover against an insurer for unfair or deceptive acts upon proof that the insured has been adversely affected or injured by either (1) a practice that is unfair or deceptive as defined by the Insurance Code or by other rules or regulations promulgated by the State Board of Insurance; or (2) a practice determined pursuant to law to be an unfair or deceptive practice in the insurance business. See Allstate Ins. Co. v. Kelly, 680 S.W.2d 595, 605 (Tex.App.Tyler 1984, writ ref'd n.r.e.).