A review of the Model Act and Regulations as originally drafted by the National Association of Insurance Commissioners (NAIC) demonstrates that their intent was for violations to be dealt with through the imposition of administrative remedies rather than judicial penalties in civil litigation. The requirements imposed such as (1) acknowledging receipt of a claim within a relatively brief time period; (2) responding in writing to communications; and (3) providing assistance and forms without requiring a showing of specific harm flowing from a violation makes judicial remedies such as a directed verdict of bad faith and/or the imposition of monetary damages a penalty that often does not match the behavior.

A number of states have attempted to correct this imbalance by providing statutorily that violations of the Unfair Claim Settlement Practices Act or regulations do not form the basis of a private right of action, either for first- or third-party claimants. In others, the appellate courts have held that no private right of action exists.

Neither of these corrective measures, however, provides complete protection from civil consequences for a violation in the course of claim handling. At least six states have been identified wherein the courts permit the introduction of evidence of violations as being a breach of an industry standard. This evidence is generally put on through an expert witness. At least one of these jurisdictions is Alaska, which statutorily prohibits a private cause of action.