What is the correct term for not settling claims in a fair and reasonable manner?

The correct term for not settling claims in a fair and reasonable manner is "unfair claims settlement." This term refers specifically to practices where an insurance company may delay, deny, or underpay valid claims, which is contrary to the ethical and legal standards expected in the insurance industry. Insurers are obligated by law to handle claims fairly, ensuring that policyholders receive the benefits they are entitled to under their policy agreements. When they fail to do so, it can lead to regulatory consequences and damage the trust between the insurer and the insured.

The concept of "unfair claims settlement" encompasses a range of practices, including failing to conduct a thorough investigation, offering settlements that are unjustly low, or delaying payments without reasonable explanations. It is a critical area of concern for both regulators and consumers as it directly impacts the financial security and peace of mind of policyholders.

The other terms listed, while related to different aspects of insurance and risk management, do not accurately capture the specific practice of mishandling claims. Defamation refers to damaging someone’s reputation through false statements, fraudulent activity involves deceit for personal gain, and claim denial simply means rejecting a claim outright. None of these terms accurately reflect the broader issue of unfair practices in claims settlement.