CUIPA/C.G.S. Sec. 31-816:
Under the Connecticut Unfair Insurance Practices Act (CUIPA) Insurers are required to settle promptly where liability has become reasonably clear; provide a reasonable explanation of the basis in the insurance policy for denial of a claim or offer a compromise settlement promptly; and accept a good faith settlement offer within policy limits. It is an insurer’s duty to accept a good faith settlement offer within the policy limits.“[W]hen the insurer unreasonably and in bad faith withholds payment of the claim of its insureds, it is subject to liability in tort.”
CUIPA subjects insurers to regulatory sanction for a pattern of practice of unfair claims practices. It does not give rise to a private cause of action for a single “unfair” claims practice. However, individual claims cite the statute insofar as it provides examples of statutorily defined unfair insurance practices. Thus, Sec. 31-816(6) states:
Committing to performing with such frequency as to indicate a general business practice any of the following . . .(f) not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear; (g) compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered inactions brought by such insureds; . . . (k) making known to insureds to claimants a policy of appeals from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration; . . . (m) failing to promptly settle claims where liability has become reasonably clear under one portion for the insurance policy coverage in order to influence settlements under other portion of the insurance policy coverage; (n) failing to promptly provide a reasonable explanation of the basis . . . for denial of a claim or for the offer of a compromise settlement; . . .
The insurer which fails to exercise due care or good faith with regard to settling claims within policy limits it subject to a direct statutory right of action by judgment creditor of the insured.However, an injured claimant must be a party to an insurance contract or be subrogated to the rights of the insured in order to assert a claim for bad faith before the liability of the insured has been established.
However, although not conclusively decided by the Connecticut Supreme Court, most Connecticut state courts have determined that the CUIPA does not provide a private cause of action.CUIPA prohibits unfair or deceptive acts in the business of insurance. Although CUIPA does not provide a private cause of action, a plaintiff may bring a CUPTA claim for an alleged violation of CUIPA.“In order to sustain a CUIPA action under CUPTA, a plaintiff must alleged conduct that is proscribed by CUIPA.”C.G.S. 38a-816(6) requires that a plaintiff alleged and prove that the relevant conduct was a part of a general business practice. And not an isolated incident.“Improper conduct in handling of a single insurance claim, without any evidence of misconduct by the defendant in the processing of any other claim, does not rise to the level of a ‘general business practice’ as required by §38a-816(6).”
“The basis for judicial imposition on liability insurers of a duty to exercise good faith or due care with respect to opportunities to settle within the policy limits is that the company has exclusive control over the decision concerning settlement within policy coverage, and company and insured often have conflicting interests as to whether settlement should be made . . . Whether one considers the insured’s claim to sound in tort, as most of the cases have . . . or as based on an expansive reading of the contractual obligation to protect up to the agreed limits .. . what gives rise to the duty and measures its extent is the conflict between the insurer’s interest to pay less than the policy limits and the insured’s interest not to suffer liability for any judgment exceeding them.”
“In determining whether to accept or reject an offer of compromise, the insurer not only may consider its own interests but also must equally respect the insured’s interests. If it fails to exercise good faith or due care in its consideration of an offer of settlement, the insurer may be held liable under causes of action which sound in tort or contract, or both”.  “The mere fact that the case could have been, but was not, settled within policy limits would not impose liability on the defendant.”
The definition of unacceptable insurer conduct in C.G.S. §38-816 reflects the legislative determination that isolated instances of unfair insurance settlement practices are not so violative of the public policy of this state as to warrant statutory intervention. A series of cases have acknowledged that the requirement of multiple acts in the claim of CUIPA is a substantial hurdle to a plaintiff who does not have access to the names of other individuals who have the same claim without the benefit of discovery. The superior courts have found that use of plural in describing claims and policies implies there are other insureds who have been harmed and that it provides sufficient background to permit them to engage in further discovery or investigation into the cause of action. While plaintiffs must prove a repeated improper conduct by the insurer, most claims will survive a motion to dismiss and proceed through discovery to allow a plaintiff to prove her case.
 SeeC.G.S. § 38a-815-816; C.G.S. § 42-110a.
 Bartlettv. Travelers’ Ins. Co., 167 A.180, 183 (Conn. 1933).
 GrandSheet Metal Products Co. v. Protec. Mut. Ins. Co., 375 A.2d 428, 429 (Conn.Super. 1977).
 C.G.S. §31-816(6)
 GeneralAcc. Group v. Gagliardi, 593 F. Supp. 1080, 1088 (1984), aff’d, 767F.2d 907 (2d Cir. 1984).
 Carfordv. Empire Fire and Marine Ins. Co., 891 A.2d 55, 58 (Conn. App. 2006) (“no claimof breach of duty of good faith and fair dealing will lie for conduct that isoutside of a contractual relationship.”).
 Szlachetka v. Mullen, Superior Court, J.D. of NewBritain, Docket No. CV-02-0513409-S, 2003 Conn. Super. LEXIS 558 (February25, 2003, Dunnell, J.)
 SeeTraylor v. Awwa, 899 F.Supp.2d 216 (D. Conn. 2012).
 Nazamiv. Patrons Mutual Ins. Co., 280 Conn. 619 (2006).
 CapstoneBuilding Corp. v. Am. Motorist Ins. Co., 308 Conn. 760 (2013).
 Leesv. Middlesex Ins. Co., 229 Conn. 842 (1994).
 Bourgetv. Gov’t Emploees Ins. Co., 456 F.2d 282, 285 (2d. Cir. 1972).
 Carfordv. Empire Fire & Marine Ins. Co., 2012 Conn. Super. LEXIS 2147 *23(Aug. 21, 2012, Tyma, J.) (citing Knudsen v. Hartford Acci. & Indem. Co., 26 Conn. Supp. 325, 327 (1966)).
 Mead v. Burns, 199 Conn. 651, 659-66 (1986).
 Seeds v. AigLife Ins. Co., No. 375958, 1996 Conn. Super. LEXIS 3233,*6 (Dec. 6, 1996); Cloutier v. Liberty Mutual Ins.Co., Superior Court, No. CV 90-278184-S, 1996Conn. Super. LEXIS 2100 (Aug. 9, 1996, Thim, J.), Sambuco v. Aetna Casualty & Surety Co., Superior Court, No. CV 89-0100637-5, 1991 Conn.Super. LEXIS 1163at *3 [4 Conn. L. Rptr. 74] (May 14, 1991, Karazin, J.).
 SeeGombos v. Sentinel Ins. Co., 2017 Conn. Super. LEXIS 3041. *5-6 (June 6,2017); Marshall v. Allstate Fire & Cas. Ins. Co., 2015 Conn. Super.LEXIS 3142, *13-14 (Dec. 14, 2015).
Chartwell Law represents the interests of insurers and employers, as such, we continue to continue to monitor the legal landscape. If you have any questions about issues associated with right of action for bad faith claims, our attorneys are available to help. Please contact your Chartwell Law attorney.