Alabama Administrative Code
Title 482 - ALABAMA DEPARTMENT OF INSURANCE
Chapter 482-1-124 - STANDARDS FOR LIFE, ACCIDENT AND HEALTH INSURANCE CLAIMS
Section 482-1-124-.04 - Claims Practices

(1) Every insurer, upon receiving notification of a claim shall, within fifteen (15) days of the notification, mail or otherwise provide necessary claim forms, instructions or reasonable assistance so the claimant can properly comply with the insurer's reasonable requirements for filing a claim.

(2) Upon receipt of proof of loss from a claimant, the insurer shall begin processing the claim within fifteen (15) days.

(3) The insurer's standards for claims processing shall be such that notice of claim or proof of loss submitted against one policy issued by that insurer shall fulfill the claimant's obligation under any and all other similar policies issued by that insurer and specifically identified by the claimant to the insurer to the same degree that the same form would be required under any similar policy. If additional information is required to fulfill the claimant's obligation under similar policies, the insurer may request the additional information. If multiple providers are involved, the insurer shall request any and all available claim information from all known providers at one time. When the insurer determines that additional benefits or proceeds would be payable under an insured's policy upon additional proofs of loss, the insurer shall communicate to and cooperate with the claimant in determining the extent of the insurer's additional liability.

(4) As to life insurance claims, upon receipt of proof of loss from a claimant, the insurer shall affirm or deny liability, or inform the claimant that the claim is being investigated, within the time set forth within the life insurance policy not to exceed sixty (60) days. If the amount of the claim is determined and not in dispute, payment should be made within a reasonable time. If portions of the claim are in dispute, the insurer shall tender payment for those portions that are not disputed within sixty (60) days of the date the insurer determines those portions of the claim which are not disputed. If the investigation remains incomplete, the insurer shall, forty-five (45) days from the date of initial notification and every forty-five (45) days thereafter, send to the claimant a letter stating that the claim is still under investigation.

(5) With each health insurance claim payment, the insurer shall provide to the claimant an explanation of benefits that shall include the name of the provider and services covered, dates of service, and a reasonable explanation of the computation of benefits if applicable.

(6) Reimbursement of health claims shall be handled as required by Section 27-1-17, Code of Ala. 1975.

(7) An insurer may not impose a penalty upon any claimant under a health insurance policy for noncompliance with insurer requirements for precertification unless such penalty is specifically and clearly set forth in the policy.

(8) A reply shall be made within twenty (20) days on all other pertinent written communications from a claimant which requests a response.

(9) When a claim is denied, written notice of denial shall be sent to the claimant within fifteen (15) days of the determination that the claim should be denied. The insurer shall state the reasons why the claim has been denied.

(10) No insurer shall deny a claim upon information obtained in a telephone conversation or personal interview with any source unless the telephone conversation or personal interview is documented in the claim file.

(11) Insurers offering cash settlements of first party long-term disability income claims, except in cases where there is a bona fide dispute as to the coverage for, or amount of, the disability, shall develop a present value calculation of future benefits (with probability corrections for mortality and morbidity) utilizing contingencies appropriate to the risk including, but not limited to mortality, morbidity, and interest rate assumptions, etc. A copy of the amount so calculated shall be given to and signed by the claimant at the time a settlement is entered into.

(12) Insurers shall not indicate to a claimant on a payment draft, check or in any accompanying letter that said payment is "final" or "a release" of any claim unless the policy limit has been paid or there has been a compromise settlement agreed to by the claimant and the insurer as to coverage and amount payable under the policy.

(13) Insurers shall not withhold any portion of any benefit payable to a claimant under a health insurance policy as a result of a claim on the basis that the sum withheld is an adjustment or correction for an overpayment made on a prior claim arising under the same policy unless both of the following occurs: