Nevada Administrative Code Chapter 686A - Insurance: Trade Practices and Frauds
📘 Overview of NAC Chapter 686A
1. General Provisions
NAC 686A.010: Defines the purpose of the chapter, aligning Nevada's regulations with federal standards to regulate trade practices in the business of insurance.
NAC 686A.015: Grants the Commissioner exclusive jurisdiction to regulate trade practices in the insurance business within the state and mandates the establishment of a program to investigate unfair or deceptive practices.
2. Prohibited Practices
NAC 686A.020: Prohibits unfair methods of competition and unfair or deceptive acts or practices in the business of insurance.
NAC 686A.040: Outlaws false information and advertising, including the dissemination of untrue, deceptive, or misleading statements regarding the insurance business.
NAC 686A.050: Defines and prohibits "twisting," which involves misrepresenting or making misleading comparisons to induce policyholders to alter or surrender their insurance policies.
NAC 686A.120: Allows exceptions to provisions limiting discrimination, rebates, and the use of securities as inducements in life insurance, annuities, and health insurance under certain conditions.
3. Claims Practices
NAC 686A.670: Mandates that insurers establish procedures to begin an investigation of any claim within 20 working days of receipt and complete the investigation within 30 days, unless a reasonable explanation for delay exists.
NAC 686A.660: Requires insurers to fully disclose to first-party claimants all pertinent benefits, coverages, or other provisions of an insurance contract or policy under which a claim is presented.
4. Insurance Fraud
NAC 686A.292: Imposes additional penalties for insurance fraud, including the payment of court costs and the cost of investigation and prosecution. Funds collected are used to support the Fraud Control Unit for Insurance.
⚖️ Relevant Case Law
Forsyth v. Humana Inc. (1996)
Citation: 114 F.3d 1467 (9th Cir. 1996)
Summary: The court examined whether certain insurance practices, such as overcharging premiums and not reducing co-payments, fell within the "business of insurance" for the purpose of the McCarran-Ferguson Act (MFA). The court concluded that these practices were part of the business of insurance and that Nevada's Trade Practices and Frauds Act was enacted to regulate such acts.
✅ Summary
NAC Chapter 686A serves as a comprehensive framework to regulate trade practices and prevent fraudulent activities within Nevada's insurance industry. By aligning state regulations with federal standards and establishing clear guidelines for ethical conduct, the chapter aims to protect consumers and ensure fair competition among insurers.
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