Insurance DOI Complaint and Bad-Faith Demand — Arkansas

Insurance DOI Complaint and Bad-Faith Demand (ARKANSAS)

Quick-Reference Summary

Part A — DOI Complaint Cover Letter

[LAW FIRM LETTERHEAD]
[Street Address]
[City], Arkansas [Zip]
Phone: [________________________________]
Email: [________________________________]
Arkansas Bar No.: [________________________________]

Date: [__/__/____]

SENT VIA:

☐ Online via AID Complaint Form (https://insurance.arkansas.gov/consumer-assistance/consumer-services/file-a-complaint/)
☐ Email: [email protected]
☐ Fax: (501) 371-2749
☐ U.S. Mail — Arkansas Insurance Department, Consumer Services Division, 1 Commerce Way, Suite 102, Little Rock, AR 72202-2087

TO:

Arkansas Insurance Department
Consumer Services Division
1 Commerce Way, Suite 102
Little Rock, AR 72202-2087

Re: Consumer Complaint — Claim No. [_____] / Policy No. [_____]

Statement of Facts

On [__/__/____], the Insured sustained a covered loss under policy no. [______] and timely submitted proof of loss on [__/__/____]. Notwithstanding AID Rule 43 (15-working-day acknowledgment; 45-day investigation) and the contractual terms of the policy, the Carrier has [denied / delayed / under-paid / failed to investigate] the claim as follows: [_______________________________________].

Statutory Basis — Trade Practices Act (Ark. Code Ann. § 23-66-201 et seq.)

The Carrier's conduct constitutes one or more unfair methods of competition or unfair or deceptive acts or practices in the business of insurance, including (check all that apply):

• ☐ § 23-66-206(13) — Unfair claim settlement practices (per Rule 43): misrepresenting pertinent facts or policy provisions; failing to acknowledge and act reasonably promptly upon communications; failing to adopt and implement reasonable standards for prompt investigation; refusing to pay without reasonable investigation; failing to affirm or deny coverage within a reasonable time; not attempting in good faith to effectuate prompt, fair, and equitable settlement of claims in which liability has become reasonably clear; compelling litigation to recover amounts due; attempting to settle for less than a reasonable person would believe entitled;
• ☐ § 23-66-206(4) — Failure to maintain complaint-handling procedures;
• ☐ § 23-66-206(6) — False information and advertising;
• ☐ § 23-66-206(13) — Other unfair claim settlement practices;
• ☐ Other: [________________________________].

The Carrier has also failed to comply with AID Rule 43, specifically:

• ☐ § 8 — failure to investigate promptly;
• ☐ § 9 — failure to effectuate prompt, fair, and equitable settlement;
• ☐ § 10 — automobile-specific settlement standards.

Relief Requested

1. ☐ Open a market-conduct investigation;
2. ☐ Direct the Carrier to provide a written response and substantive explanation;
3. ☐ Determine general business practice and impose administrative sanctions under § 23-66-209 (cease and desist; up to $5,000 per knowing violation, max $50,000 / $250,000 for flagrant or willful);
4. ☐ Refer producer/adjuster misconduct to the Licensing Division;
5. ☐ Acknowledge that the Insured reserves all rights to pursue § 23-79-208 statutory penalty and common-law bad-faith remedies.

Enclosures

• ☐ Authorization for release of information
• ☐ Certified policy with declarations and endorsements
• ☐ Proof of loss; claim correspondence; denial letters
• ☐ Demand letter to Carrier (Part B)

The Insured acknowledges that the Department cannot provide legal advice, act as the Insured's attorney, or order the Carrier to pay benefits.

Respectfully,

_______________________________________________
[Attorney Name], Arkansas Bar No. [_______]

Part B — Bad-Faith Demand Letter to Carrier

[LAW FIRM LETTERHEAD]

SENT VIA:

☐ Certified Mail, Return Receipt Requested — Tracking No. [________________________________]
☐ FedEx/UPS Overnight — Tracking No. [________________________________]
☐ Service on Arkansas Insurance Commissioner as statutory agent (foreign insurer) — Ark. Code Ann. § 23-79-301

Date: [__/__/____]

TO:

[Carrier Name]
Attn: Claims Manager / General Counsel / Registered Agent
[Street Address]
[City], [State] [Zip]
With copy to: Arkansas Insurance Department, Consumer Services Division

Re: Statutory Demand Under Ark. Code Ann. § 23-79-208 and Notice of Common-Law Bad-Faith Claim
Insured: [________________________________]
Policy No.: [________________________________]
Claim No.: [________________________________]
Date of Loss: [__/__/____]

CONFIDENTIAL SETTLEMENT COMMUNICATION — A.R.E. 408

I. Introduction

This firm represents [Insured] in connection with the above claim. This letter is a formal statutory demand for payment of the loss under Ark. Code Ann. § 23-79-208(a)(1) and serves as notice of the Insured's intent to assert common-law bad faith under Aetna Cas. & Sur. Co. v. Broadway Arms Corp., 281 Ark. 128, 664 S.W.2d 463 (1984), and breach of contract, if this matter is not resolved by the deadline below.

II. Summary of Claim

III. Statutory Demand — Ark. Code Ann. § 23-79-208(a)(1)

Pursuant to Ark. Code Ann. § 23-79-208(a)(1), the Insured hereby formally demands payment of the loss in the amount of $[__________]. If the Carrier fails to pay the loss within the time specified in the policy after this demand, the Carrier "shall be liable to pay the holder of the policy or his or her assigns, in addition to the amount of the loss, twelve percent (12 percent) damages upon the amount of the loss, together with all reasonable attorney's fees for the prosecution and collection of the loss." § 23-79-208(a)(1). The statutory penalty and fees attach even if the Carrier denied coverage in good faith. Home Mut. Fire Ins. Co. v. Jones, 63 Ark. App. 221, 977 S.W.2d 12 (1998).

IV. Common-Law Bad Faith — Broadway Arms Standard

Beyond the statutory penalty, the Carrier's conduct constitutes common-law bad faith. Under Arkansas law, "bad faith must include affirmative misconduct by the insurance company, without a good faith defense, and that the misconduct must be dishonest, malicious, or oppressive in an attempt to avoid its liability under an insurance policy." Aetna Cas. & Sur. Co. v. Broadway Arms Corp., 281 Ark. at 133–34, 664 S.W.2d at 465. The Insured does not rest its bad-faith claim on a mere refusal to pay, an offer to compromise, an honest error of judgment, or red tape (Switzer v. Shelter Mut. Ins. Co., 362 Ark. 419, 208 S.W.3d 792 (2005); Unum Life Ins. Co. of Am. v. Edwards, 362 Ark. 624 (2005)). Specific facts of affirmative misconduct here include:

1. [Document affirmative misconduct — e.g., fabricated grounds for denial, intimidation, threat to cancel, instructing insured to falsify records, retaliatory underwriting, deliberate misrepresentation of policy] [____________]
2. [Document oppression or maliciousness — e.g., refusal to pay undisputed portion, weaponized EUO, abusive litigation tactics, exploiting elderly or vulnerable insured] [____________]
3. [Document dishonesty — e.g., adjuster notes contradicting denial reasons, ghost-written IME, suppressed evidence, manipulated estimating software] [____________]

V. Rule 43 Violations

The Carrier has further violated AID Rule 43, evidence of which is admissible to show absence of a reasonable basis and to support penalty assessment:

• ☐ § 4 — failure to acknowledge claim within 15 working days;
• ☐ § 8 — failure to complete investigation within 45 calendar days;
• ☐ § 9 — failure to effectuate prompt, fair, and equitable settlement;
• ☐ § 10 — automobile-specific settlement standards;
• ☐ Other: [________________________________].

VI. Damages

VII. Time-Limited Settlement Demand

The Insured demands tender of $[__________] on or before 5:00 p.m. Central Time on [__/__/____] (not less than 30 days from receipt and not less than the policy's specified payment period after this demand). Failure to tender within the policy time triggers the § 23-79-208 12% penalty and reasonable attorney's fees as a matter of law upon judgment.

VIII. Litigation Hold / Preservation Notice

The Carrier and its claims handlers, supervisors, vendors, IMEs, file-review providers, SIU personnel, and outside counsel are directed to preserve, and to suspend any destruction practice affecting:

• ☐ Complete claim file (paper, electronic, claim-notes platform);
• ☐ Adjuster diaries, reserve histories, escalation memos;
• ☐ Recorded statements (Arkansas is a one-party consent state);
• ☐ Communications with vendors, IMEs, peer-review providers, surveillance;
• ☐ Rule 43 compliance documentation and complaint-handling records (5-year retention under § 23-66-206(4)(B));
• ☐ Underwriting file, ISO/CLUE reports;
• ☐ ESI metadata, audit logs, system access records.

IX. Reservation of Rights

The Insured expressly reserves all rights and remedies under Ark. Code Ann. § 23-79-208, common-law bad faith, contract, equity, and the Arkansas Constitution.

Respectfully,

_______________________________________________
[Attorney Name], Arkansas Bar No. [_______]
[Law Firm], [Address], [Phone], [Email]

Part C — Pre-Filing Checklist

• ☐ Confirm policy was issued in or covers Arkansas risk; verify Carrier's certificate of authority with AID
• ☐ Identify the policy's time-to-pay-after-demand provision (often 60 days) — calendar deadline
• ☐ Make a formal written demand under § 23-79-208 in advance of suit; preserve proof of delivery
• ☐ Document Rule 43 violations: 15-working-day acknowledgment / 45-day investigation
• ☐ Calculate 12% statutory damages on the LOSS amount (not premium)
• ☐ Confirm SOL: 5 years (§ 23-79-202; § 16-56-111(b))
• ☐ Build affirmative-misconduct record (Aetna v. Broadway Arms) — not just denial or delay
• ☐ Distinguish bad-faith case from "fairly debatable" / honest-error scenarios (Switzer; Unum)
• ☐ Submit dual-track: AID complaint (Part A) + Carrier demand (Part B) simultaneously
• ☐ Plead § 23-79-208 statutory claim AND common-law bad faith as separate counts
• ☐ Calendar policy time-to-pay AND 30-day demand-letter response deadlines
• ☐ Evaluate punitive predicate under Ark. Code Ann. § 16-55-206 (clear and convincing evidence)
• ☐ Identify claim-handling expert and damages experts
• ☐ Send via certified mail, return receipt; copy to AID Consumer Services
• ☐ Issue litigation hold to client; spoliation notice to carrier

Sources and References

• Arkansas Insurance Department — File a Complaint: https://insurance.arkansas.gov/consumer-assistance/consumer-services/file-a-complaint/
• AID Homepage: https://insurance.arkansas.gov/
• NAIC SBS Arkansas Complaint Form: https://sbs.naic.org/solar-web/pages/public/onlineComplaintForm/onlineComplaintForm.jsf?state=AR
• Ark. Code Ann. § 23-79-208 (12% Penalty + Attorney's Fees): https://law.justia.com/codes/arkansas/title-23/subtitle-3/chapter-79/subchapter-2/section-23-79-208/
• Ark. Code Ann. § 23-66-206 (Unfair Methods of Competition): https://law.justia.com/codes/arkansas/title-23/subtitle-3/chapter-66/subchapter-2/section-23-66-206/
• AID Rule 43 (Unfair Claims Settlement Practices Regulations): https://insurance.arkansas.gov/wp-content/uploads/2024/02/Rule-43.pdf
• Aetna Cas. & Sur. Co. v. Broadway Arms Corp., 281 Ark. 128, 664 S.W.2d 463 (1984)
• McCall v. Southern Farm Bureau Cas. Ins. Co., 255 Ark. 401, 501 S.W.2d 223 (1973)
• Switzer v. Shelter Mut. Ins. Co., 362 Ark. 419, 208 S.W.3d 792 (2005)
• Unum Life Ins. Co. of Am. v. Edwards, 362 Ark. 624, 210 S.W.3d 84 (2005)
• Home Mut. Fire Ins. Co. v. Jones, 63 Ark. App. 221, 977 S.W.2d 12 (1998)
• State Auto Prop. & Cas. Ins. Co. v. Swaim, 338 Ark. 49, 991 S.W.2d 555 (1999)
• Arkansas Attorney General — File a Complaint: https://arkansasag.gov/file-a-complaint/