What is an example of improper claims practices that could lead to the removal of an insurer?

Encouraging excessive claims is considered an improper claims practice because it undermines the integrity of the insurance system. Insurers have a responsibility to manage claims fairly and responsibly, ensuring that they only process legitimate claims that fall within the policy’s terms. When an insurer encourages policyholders to submit excessive claims, it creates a culture of opportunism where individuals may take advantage of the system, leading to inflated costs. This practice can result in financial instability for the insurer and elevate premiums for all policyholders, as the insurer may need to recover incurred losses by increasing rates. Consequently, regulatory authorities may view this behavior as unethical or fraudulent, which can lead to disciplinary action, including the removal of the insurer from the marketplace.

In contrast, the other options either represent acceptable practices within an insurance context or do not reach the level of misconduct that would prompt removal from the market. For instance, keeping low claims payments might indicate a strict interpretation of policy terms but does not inherently involve malfeasance. Apologizing for delays may demonstrate good customer service rather than improper practices. Providing inaccurate policy information could be problematic but typically falls under regulatory scrutiny without immediate consequences such as removal.