An independent insurance brokerage is brainstorming ways to increase commercial sales before the end of the year. The partners propose several different marketing and client acquisition strategies.
Which of the following proposed strategies would be classified as an unfair trade practice under state insurance regulations? (Select all that apply)
- Offering a prospective client a heavily discounted subscription to a payroll management software if they purchase a general liability policy.Answer
- Publishing a blog post that falsely claims a competing brokerage is on the verge of bankruptcy and is unable to pay its clients' claims.Answer
- CProviding existing commercial clients with a complimentary annual policy review to identify potential gaps in their current coverage limits.
- DRunning a targeted advertisement that accurately compares the brokerage's customer satisfaction scores with publicly available industry averages.
Answer
The strategies classified as unfair trade practices are offering a discounted software subscription tied to a policy purchase (rebating) and publishing false claims about a competitor's financial status (defamation).
The correct selections describe clear violations of state insurance law: rebating (offering an outside incentive to secure a sale) and defamation (publishing false, damaging financial information about a competitor).
Step-by-Step Solution
Key Concept
Unfair Trade Practices (Rebating and Defamation)
Estimated Time:1m 30s